Bank of Korea adopts cautious stance on Bitcoin reserve plans

The Bank of Korea (BOK) has stated it is taking a cautious approach to the idea of including Bitcoin (CRYPTO:BTC) in its foreign exchange reserves, citing concerns over high volatility and liquidity risks.

In a written response to Representative Cha Gyu-geun of the National Assembly’s Planning and Finance Committee on March 16, the central bank clarified that it has “neither discussed nor reviewed” such plans, emphasising the need for caution.

The BOK highlighted Bitcoin’s price instability as a major deterrent.

Over the past month, Bitcoin prices have fluctuated significantly, ranging between $98,000 and $76,000 before settling around $83,000—a 15% decline since mid-February.

Officials noted that during periods of market instability, transaction costs for converting Bitcoin into cash could rise sharply, further complicating its use as a reserve asset.

This cautious stance aligns with South Korea’s broader approach to cryptocurrency integration.

The Financial Services Commission (FSC) has previously ruled out creating a national Bitcoin reserve for now, focusing instead on integrating digital assets into traditional financial systems.

FSC Chairman Kim Byung-hwan has stated that South Korea is closely monitoring developments in other countries, particularly the United States, which recently announced plans for a strategic Bitcoin reserve under President Donald Trump’s administration.

Calls for South Korea to adopt a Bitcoin reserve strategy have been growing among crypto lobbyists and some lawmakers.

At a seminar earlier this month, proponents urged the government to consider Bitcoin’s inclusion in national reserves and explore the development of a won-backed stablecoin.

However, the BOK reiterated that foreign exchange reserves must meet strict criteria for liquidity and creditworthiness—standards Bitcoin currently does not fulfill.

Experts have weighed in on the issue.

Professor Yang Jun-seok from the Catholic University of Korea argued that foreign exchange reserves should reflect trade relationships with other nations.

Meanwhile, Professor Kang Tae-soo from KAIST suggested that stablecoins may play a more significant role in future reserve strategies than volatile cryptocurrencies like Bitcoin.

At the time of reporting, the Bitcoin (BTC) price was $83,337.71.