South Korean Central Bank Rules Out Bitcoin Reserves Despite Global Trend

The Bank of Korea (BOK) has officially stated it has not considered adding bitcoin to its foreign exchange reserves. The statement came Sunday in response to a written query from a member of the National Assembly's Strategy and Finance Committee.

According to the Korea Economic Daily, the central bank pointed to bitcoin's high volatility as the main reason for its stance. The BOK expressed worry that this volatility could cause major increases in transaction costs when converting bitcoin back to traditional currency.

The central bank also noted that bitcoin fails to meet the International Monetary Fund's guidelines for foreign exchange reserve management. The IMF requires that foreign exchange reserves control liquidity, market and credit risks "in a prudent manner."

This position contrasts with recent developments in the United States, where President Donald Trump signed an executive order on March 6 to establish a Strategic Bitcoin Reserve. The U.S. reserve will be based on bitcoin seized during criminal or civil proceedings.

While Trump's action has prompted several countries to consider creating their own bitcoin reserves, South Korea has aligned with Japan, Switzerland, and the European Central Bank in taking a more cautious approach.

Despite its reluctance regarding bitcoin reserves, South Korea has been working to ease its strict cryptocurrency regulations. The country's financial watchdog is currently:

• Gradually lifting the ban on institutional crypto trading
• Preparing to establish a second crypto legal framework
• Focusing on stablecoin management

This regulatory shift suggests that while the BOK remains cautious about bitcoin as a reserve asset, the country continues to develop its broader approach to cryptocurrency integration in the financial system.