The Bank of Korea (BOK) has ruled out adding Bitcoin in its foreign exchange reserves because of its high price volatility and liquidity risks. A written inquiry from Representative Cha Gyu-geun received a response from the central bank which stated it has not reviewed or discussed adding Bitcoin to its foreign exchange reserves.
According to The Korea Herald, BOK officials emphasized the risks, noting that “Bitcoin’s price volatility is very high,” and transaction costs could surge during market instability. Over the past month, Bitcoin has fluctuated between $98,000 and $76,000 before settling around $83,000, a 15% decline since Feb. 16.
The decision comes as global discussions on Bitcoin’s role in national reserves gain momentum. Earlier this month, U.S. President Donald Trump issued an executive order to establish a strategic Bitcoin reserve and digital asset stockpile.
At a seminar on March 6, crypto industry advocates and Democratic Party members urged South Korea to integrate Bitcoin into its reserves and develop a won-backed stablecoin. However, BOK stressed that reserves must be highly liquid, immediately usable, and have investment-grade credit ratings—criteria Bitcoin does not meet.
According to the expert, the IMF’s potential approval of stablecoins as foreign exchange reserves would create significant changes in the market.
The Bank of Korea rejects Bitcoin for its reserves because it considers volatility alongside withdrawal expenses to be too risky. The country maintains its commitment to traditional financial assets despite rising worldwide interest in cryptocurrency.
Also Read: US Bitcoin Reserve Attracted Govts to Crypto: Coinbase CEO
