In recent weeks, global interest in national cryptocurrency reserves has surged, particularly following high-profile developments in the United States. However, South Korea’s central bank remains firmly on the sidelines, adopting what it describes as a “cautious approach” toward any potential inclusion of Bitcoin (BTC) in its foreign exchange reserves.
Despite growing calls from lawmakers and blockchain advocacy groups within the country, the Bank of Korea (BOK) has confirmed it has neither discussed nor evaluated the feasibility of holding Bitcoin as part of its national reserves.
No Active Discussion on Bitcoin Reserves
On March 16, BOK officials responded to written inquiries from National Assembly Planning and Finance Committee representative Cha Kyu-gen, stating clearly that Bitcoin has not been under formal review for inclusion in the nation’s foreign exchange reserves. The central bank cited price volatility and market instability as primary concerns.
“Given the high volatility of Bitcoin prices, we have not considered incorporating it into our reserve assets,” the officials said. “A cautious attitude is necessary.”
This position aligns with traditional financial principles, where reserve assets must meet strict criteria: high liquidity, low volatility, and strong creditworthiness—typically investment-grade or higher. From the BOK’s perspective, cryptocurrencies like Bitcoin fail to meet these foundational requirements.
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Volatility Remains a Key Obstacle
Data from CoinGecko shows that over the past 30 days alone, Bitcoin’s price has swung dramatically between $98,000 and $76,000. Since February 16, BTC has declined by approximately 15%, currently trading around $83,000. Such fluctuations underscore the challenges central banks face when considering crypto assets for reserve portfolios.
The BOK further emphasized that during periods of market stress, the transaction costs associated with converting Bitcoin into fiat currency could rise sharply, undermining its utility as a reliable reserve instrument.
“Foreign exchange reserves need to be readily accessible and stable in value,” said a senior official familiar with the matter. “Bitcoin’s speculative nature makes it unsuitable at this stage.”
Global Context: U.S. Moves Spark Debate
The debate in South Korea comes amid broader international discussions about the role of digital assets in national finance strategies. In early March, U.S. President Donald Trump signed an executive order directing federal agencies to establish a strategic Bitcoin reserve and develop a framework for a national digital asset inventory.
This move has reignited conversations worldwide about whether sovereign nations should begin treating Bitcoin as a legitimate store of value—similar to gold or foreign currencies.
In response, a group of members from South Korea’s Democratic Party, along with blockchain industry lobbyists, held a seminar on March 6 advocating for two major policy shifts:
- The adoption of Bitcoin as part of South Korea’s national reserve strategy
- The development of a won-backed stablecoin to enhance payment efficiency and financial innovation
While these proposals reflect growing enthusiasm within certain political and technological circles, they have yet to gain traction with regulatory authorities.
Academic Perspectives: Stability Over Speculation
South Korean financial experts remain divided on the long-term implications of crypto reserves.
Professor Yang Jun-seok from the Catholic University of Korea supports the central bank’s conservative stance. He argues that foreign reserves should mirror actual trade relationships.
“Reserves should be held in proportion to the currencies of countries we trade with,” Yang explained. “Introducing a highly volatile asset like Bitcoin disrupts this balance.”
Meanwhile, Professor Kang Tae-soo from the KAIST Graduate School of Finance believes the future of digital reserves may lie not in Bitcoin, but in regulated stablecoins.
“Rather than adopting Bitcoin, the U.S. might leverage dollar-denominated stablecoins to maintain its global monetary dominance,” Kang suggested. “The real question is whether institutions like the IMF will eventually recognize stablecoins as legitimate reserve assets.”
This perspective highlights a critical distinction: while decentralized cryptocurrencies pose risks due to their volatility, fiat-collateralized stablecoins offer potential benefits in cross-border transactions and financial inclusion—without sacrificing stability.
Regulatory Watch: Eyes on Japan and ETF Policies
South Korea’s financial regulators are also closely monitoring legislative trends in neighboring Japan, particularly those led by the Japan Financial Services Agency (JFSA), which has taken progressive steps toward regulating crypto markets.
One key area under review is whether to lift South Korea’s current ban on cryptocurrency exchange-traded funds (ETFs). Allowing such products could provide retail investors with safer exposure to digital assets while maintaining regulatory oversight.
However, any shift would require careful coordination between the Financial Services Commission (FSC), the BOK, and other stakeholders to ensure investor protection and market integrity.
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FAQ: Understanding South Korea’s Position on Crypto Reserves
Q: Has South Korea officially rejected Bitcoin for its reserves?
A: While not an outright rejection, the Bank of Korea confirms it has not discussed or reviewed Bitcoin for reserve inclusion and maintains a cautious stance due to volatility and liquidity concerns.
Q: Why can’t Bitcoin be used as a reserve asset?
A: Reserve assets must be stable, liquid, and reliable. Bitcoin’s extreme price swings and unregulated market structure make it unsuitable under current financial standards.
Q: Could South Korea adopt a national stablecoin in the future?
A: There is growing discussion around issuing a won-backed stablecoin, especially for improving payments infrastructure. However, no official plans have been announced yet.
Q: Are crypto ETFs legal in South Korea?
A: As of now, South Korea prohibits cryptocurrency-based ETFs. Regulators are evaluating international models, including those in the U.S. and Japan, before making policy decisions.
Q: How does South Korea’s view compare to other G20 nations?
A: Like most G20 central banks, South Korea prioritizes financial stability over speculative innovation. Only a few countries are actively exploring crypto reserves, mostly at experimental levels.
Q: What impact does the U.S. Bitcoin reserve order have on Asia?
A: It increases regional dialogue but doesn’t immediately influence policy. Asian regulators tend to move more cautiously, emphasizing risk management over rapid adoption.
Looking Ahead: Caution Amid Innovation
While political and industry voices push for bolder steps, South Korea’s financial authorities remain focused on stability, transparency, and systemic safety. For now, Bitcoin remains outside the realm of official reserve consideration.
Yet the conversation is far from over. As global markets evolve and digital asset frameworks mature, countries like South Korea may revisit the idea—with stronger safeguards and clearer use cases.
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For investors and policymakers alike, the key takeaway is clear: innovation must be balanced with prudence. And in one of Asia’s most advanced economies, that balance continues to tilt toward caution—for now.