South Korea Rules Out Bitcoin as Foreign Reserve Asset, Citing Volatility Risks
South Korea’s central bank, the Bank of Korea (BOK), has dismissed the possibility of holding Bitcoin (BTC) in its foreign exchange reserves, citing concerns over price instability and regulatory standards, according to a Korea Economic Daily report.
In response to inquiries from the National Assembly’s Strategy and Finance Committee, the BOK clarified on Sunday that it has not considered adopting BTC as part of its reserve strategy.
Bitcoin’s Volatility Poses Risks for Reserve Management
The primary reason behind the decision is Bitcoin’s well-documented price volatility, which could significantly increase transaction costs when converting BTC to fiat. The BOK views this as a major risk to its foreign exchange reserves, making it an unsuitable asset for official holdings.
Additionally, the BOK cited the International Monetary Fund’s (IMF) standards for foreign reserve management, which emphasize liquidity, market stability, and credit risk controls—criteria that Bitcoin does not fulfill due to its unpredictable nature.
Crypto Thrives in South Korea Despite Central Bank’s Caution
Despite the BOK’s stance, South Korea remains a major player in the crypto industry, with local startups, exchanges, and digital asset firms driving billions in daily trading volume. The country’s insular yet active crypto market continues to flourish, even as regulators take a measured approach toward digital assets.
As of Monday afternoon in Asia, Bitcoin was trading around $83,400, down 1% over the past 24 hours.
