Bank of Korea Rejects Bitcoin for Foreign Exchange Reserves

The Bank of Korea rejects Bitcoin for foreign exchange reserves due to volatility, liquidity concerns, and failure to meet IMF criteria, despite global support.

Zagham Abbas
March 18, 2025
12:00 am

Zagham Abbas

Zagham is a renowned crypto journalist known for his insightful analysis and in-depth reporting on the cryptocurrency industry.

The Bank of Korea rejects Bitcoin for foreign exchange reserves due to its volatility and liquidity concerns.
Bitcoin doesn’t meet IMF criteria for reserves, lacking stability and convertibility.
No one has held formal discussions on Bitcoin’s inclusion in Korea’s financial portfolio.

The Bank of Korea (BOK) has denied any plan to include Bitcoin in the country’s foreign exchange reserves, clarifying that the idea has “never been reviewed.” The response was provided on March 16 after Rep. Cha Gyu-geun of the Democratic Party of Korea formally asked if Bitcoin can be accepted as part of Korea’s financial assets.

This is the first formal stance from South Korea’s central bank on the matter. In a report by Korea Economic TV, the BOK mentioned the extreme volatility of Bitcoin as one of the reasons to be cautious. The virtual currency has experienced drastic fluctuations in price, rising to 160 million won ($119,000) in January, before dropping to 110 million won ($82,000). While some expect more upside, skeptics believe Bitcoin’s value could collapse entirely.

According to Korea Economic TV, the Bank of Korea (BOK) stated that it has never considered including Bitcoin in its foreign exchange reserves and believes a cautious approach is necessary. BOK pointed out that Bitcoin’s price is highly volatile, and in times of market…
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Bank of Korea Dismisses Bitcoin Reserves Over Volatility

BOK elaborated on the risks of including Bitcoin in foreign reserves. Unbridled volatility could exponentially increase the transaction cost of converting BTC to fiat, particularly when markets are trending lower. Further, the bank noted that BTC does not satisfy the IMF standards for foreign exchange reserves which require the assets to be highly liquid, readily tradable, and denominated in a creditworthy and stable currency.

The central bank reiterated that there has never been any review or discussion on BTC reserves. “There has been no discussion or review of Bitcoin’s inclusion in foreign exchange reserves so far,” the BOK stated. While some nations, such as Brazil and the Czech Republic, have shown interest in BTC reserves, mainstream financial institutions, such as the European Central Bank (ECB), the Swiss National Bank, and the Japanese government, have been less enthusiastic.

BOK announces this after intense global debates on the use of Bitcoin in national reserves. In the United States, for instance, President Donald Trump recently signed an executive order to establish a strategic BTC reserve. The program focuses on BTC seized through legal proceedings rather than new federal acquisitions.

As BTC adoption continues to increase, central banks remain divided on whether they should embrace the world’s leading cryptocurrency as an official reserve asset. While South Korea’s central bank has summarily dismissed the idea, at least for now, the global discussion on Bitcoin’s role in national reserves is far from over.