The Bank of Korea (BOK) has clarified that it has not yet considered adding Bitcoin (BTC) to its foreign exchange reserves, despite increasing calls from lawmakers and crypto advocates for the country to explore digital asset reserves.

In a March 16 statement responding to an inquiry from National Assembly Representative Cha Gyu-geun, the central bank reaffirmed its cautious approach toward Bitcoin reserves, emphasizing concerns over price volatility and liquidity issues.

Bitcoin’s price volatility is very high. In case of cryptocurrency market instability, transaction costs to cash out Bitcoins could rise drastically.

Bitcoin’s Place in National Reserves?

The discussion on whether Bitcoin should be included in foreign exchange reserves has gained momentum globally, particularly after U.S. President Donald Trump’s recent executive order establishing a strategic Bitcoin reserve.

In South Korea, crypto industry lobbyists and members of the Democratic Party recently advocated for the country to adopt Bitcoin as part of its financial strategy. During a March 6 seminar, proponents also suggested the creation of a won-backed stablecoin to strengthen South Korea’s financial independence.

However, the BOK remains skeptical, arguing that foreign exchange reserves should prioritize liquidity, stability, and investment-grade credit ratings, criteria that Bitcoin does not yet meet.

Bitcoin’s notorious price swings remain a major factor in the BOK’s reluctance. Over the past month, BTC has fluctuated between $98,000 and $76,000, currently trading at around $83,000, a 15% decline from mid-February, according to CoinGecko.

Economists and financial experts in South Korea share the central bank’s hesitancy. Professor Yang Jun-seok of the Catholic University of Korea supports a more traditional reserve strategy, stating that foreign exchange should align with major trade partners' currencies.

Similarly, Professor Kang Tae-soo of KAIST’s Graduate School of Finance suggested that the U.S. is more likely to leverage stablecoins rather than Bitcoin to maintain dollar dominance. He emphasized that the IMF’s stance on recognizing stablecoins as official reserves could shape future global policies.

While South Korea remains hesitant to integrate crypto into its official reserves, its financial regulator is closely monitoring legislative developments in Japan. Recent reports indicate that the Japanese Financial Services Agency (FSA) is exploring regulatory frameworks for crypto assets, potentially influencing South Korea’s own approach.

Additionally, discussions about lifting South Korea’s ban on crypto exchange-traded funds (ETFs) are gaining traction, signaling a possible shift in regulatory attitude toward digital assets.

The Future of Bitcoin in South Korea’s Financial Strategy

Despite mounting pressure from crypto advocates, the Bank of Korea appears unlikely to embrace Bitcoin as a reserve asset in the near future. With concerns over volatility, liquidity, and regulatory uncertainty, the bank is expected to maintain its traditional approach to foreign exchange reserves for now.

However, with global financial trends evolving, including the U.S.’s strategic Bitcoin moves and growing discussions on stablecoin adoption, South Korea may eventually reassess its position on digital assets in national reserves.

For now, the BOK is standing firm, emphasizing caution over speculation as it navigates the complex landscape of crypto adoption at a national level.

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