The Bank of Korea has recently announced its cautious approach towards potentially including Bitcoin as part of its foreign exchange reserves. In a response to a written inquiry from Representative Cha Gyu-geun, a member of the National Assembly’s Planning and Finance Committee, officials from the central bank stated that they have not discussed or reviewed the prospect of adopting Bitcoin due to its pronounced volatility.
According to the bank’s assessment, Bitcoin’s price instability could lead to escalated transaction costs during market turbulence. They indicated that the cryptocurrency market’s fluctuations make it hard to justify the integration of Bitcoin into national reserves. As reflected in recent data, Bitcoin’s price has swung dramatically between $98,000 and $76,000 in just the last month, with current valuations hovering around $83,000, marking a 15% drop since mid-February.
This caution comes at a time when there’s an increasing global conversation about the role of cryptocurrencies in national financial strategies, a discussion prompted by U.S. President Donald Trump’s recent executive order to create a strategic Bitcoin reserve. On March 6, some members of South Korea’s Democratic Party and crypto industry lobbyists advocated for integrating Bitcoin into the country’s national reserves and even proposed the development of a wonder-backed stablecoin.
However, echoing the Bank of Korea officials, several experts underscored that the criteria for foreign exchange reserves include liquidity and an investment-grade credit rating—requirements that Bitcoin currently fails to meet. Professor Yang Jun-seok from the Catholic University of Korea stated, “It is appropriate for foreign exchange to be held in proportion to the currencies of countries with which we trade.” Furthermore, Professor Kang Tae-soo from KAIST highlighted that the U.S. is likely to prefer stablecoins over Bitcoin to maintain its dollar dominance, making the potential recognition of stablecoins as foreign exchange reserves by the IMF a significant consideration for future discussions.
In addition to these discussions about Bitcoin, South Korea’s financial regulators have been monitoring legislative trends surrounding crypto assets in Japan as they contemplate lifting the ban on crypto exchange-traded funds (ETFs) within the country. This indicates a willingness to engage with the evolving landscape of digital assets cautiously and strategically.
