The central bank of South Korea is not buying into the (popular) notion of including Bitcoin in its foreign exchange stockpile, citing the cryptocurrency’s extreme price volatility and lack of recognition as a reserve asset under international standards.
This cautious approach, according to a report by The Korea Herald, positions the Bank of Korea (BOK) among the increasing number of global financial institutions that are hesitant to incorporate crypto into their strategic holdings.
BTC Exclusion From Foreign Exchange Reserves
Representative Cha Gyu-geun of the National Assembly’s Planning and Finance Committee inquired about the idea of integrating the flagship crypto in the country’s reserves, prompting the BOK to respond.
The central bank clarified that it had not reviewed or discussed such a move, and it firmly dismissed the notion as impractical. Officials have noted that BTC does not satisfy the International Monetary Fund’s (IMF) criteria for reserve assets, which include an investment-grade credit rating, usability, and liquidity.
BREAKING:
South Korea’s central bank
rejects the idea of creating a
Strategic Bitcoin Reserve. pic.twitter.com/ag5N7AmovF— Ash Crypto (@Ashcryptoreal) March 17, 2025
The bank considers Bitcoin unsuitable for foreign exchange holdings due to its price fluctuations and vulnerability to market speculation.
Increasing Global Interest In Bitcoin Reserves
Recent global developments are in stark contrast to the central bank’s cautious stance. It is worth noting that the United States has demonstrated a growing interest in Bitcoin, with US President Donald Trump recently advocating for a strategic Bitcoin reserve.
Other nations, such as El Salvador, have already included Bitcoin into their financial blueprint, depending on its long-term promise as a hedge against conventional currency risks.
Meanwhile, legislators and supporters of cryptocurrencies at the local scene argue that South Korea should look at using Bitcoin as a means of economic diversification.
Stablecoin Proposal
Some have even proposed the creation of a stablecoin backed by the national currency, the won, in order to keep South Korea’s competitive advantage in the fast-changing digital asset landscape.
Still, the BOK is adamant that other highly liquid and credit stable assets as well as significant trading partner currencies should make up most of the foreign exchange reserves.
South Korea has been actively in the process of devising regulatory frameworks for cryptocurrency exchanges and digital asset trading, despite its skepticism toward Bitcoin as a reserve asset.
Featured image from Gemini Imagen, chart from TradingView
