The Bank of Korea has stated it is adopting a “cautious approach” regarding the possibility of adding Bitcoin to its foreign exchange reserves.
In a response to a written inquiry on March 16, officials from the central bank revealed that they have not considered a Bitcoin (BTC) reserve due to its significant volatility.
In reply to a question posed by Representative Cha Gyu-geun from the National Assembly’s Planning and Finance Committee, central bank officials indicated that they have “neither discussed nor reviewed the potential inclusion of Bitcoin in foreign exchange reserves,” remarking that “a cautious approach is necessary,” as reported by the Korea Herald.
The central bank remarked, “Bitcoin’s price volatility is exceptionally high,” and added that “in instances of instability in the cryptocurrency market, the transaction costs to liquidate Bitcoins could increase considerably.”
According to CoinGecko, Bitcoin prices have fluctuated dramatically over the past month, ranging from $98,000 to $76,000, and currently hover around $83,000, marking a 15% decline since February 16.
This decision arrives as global dialogue intensifies regarding the integration of crypto assets into national financial strategies, particularly following US President Donald Trump’s recent executive order that established a strategic Bitcoin reserve and digital asset stockpile.
During a seminar on March 6, lobbyists from the crypto industry and certain members of Korea’s Democratic Party advocated for the nation to incorporate Bitcoin into its reserves and to create a stablecoin backed by the won.
Nevertheless, the Bank of Korea reiterated that its foreign exchange reserves must possess liquidity and be readily accessible when required, as well as holding a credit rating of investment grade or higher—criteria which, in their view, Bitcoin does not fulfill.
Professor Yang Jun-seok from Catholic University of Korea agreed, asserting that “it is appropriate for foreign exchange to be maintained in proportion to the currencies of trading partners.”
Professor Kang Tae-soo from the KAIST Graduate School of Finance remarked that the U.S. is likely to utilize stablecoins rather than Bitcoin to uphold dollar dominance, and noted, “Whether the IMF will recognize stablecoins as foreign exchange reserves in the future is a crucial factor.”
Related: Democrat lawmaker calls for Treasury to halt Trump’s Bitcoin reserve initiatives
Earlier this month, South Korea’s financial regulator reviewed the Japanese Financial Services Agency’s legislative movement towards crypto assets as it considers lifting the ban on crypto exchange-traded funds in the country.
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