South Korea Rejects Bitcoin Reserve, Citing Volatility and IMF Rules
South Korea’s central bank officially dismissed the notion of adding bitcoin to its foreign exchange reserves, citing market instability and international regulatory guidelines.
By Tylt Editorial Team
The Bank of Korea (BOK) states it hasn’t considered a bitcoin reserve.
Volatility and non-compliance with IMF guidelines are major reasons.
South Korea is gradually easing crypto regulations despite this stance.
The Bank of Korea has confirmed that it has no plans to incorporate bitcoin into its foreign exchange reserves. Responding to a formal inquiry from a National Assembly committee member, the central bank outlined its reasons for not pursuing this path. Chief among these are bitcoin’s pronounced volatility and its failure to align with the International Monetary Fund’s (IMF) reserve management guidelines.
According to a report from the Korea Economic Daily, the BOK expressed concerns that the inherent unpredictability of cryptocurrency markets could lead to significant transactional costs when liquidating holdings. This volatility, coupled with the IMF’s prudent requirements for controlling liquidity, credit, and market risks, has led the central bank to rule out any consideration of bitcoin as a reserve asset.
The decision comes amid a global backdrop where other countries have started to entertain the idea of national bitcoin reserves. For example, the United States made headlines when former President Donald Trump signed an executive order to establish a Strategic Bitcoin Reserve in 2020, prompting international discourse on the feasibility of holding digital assets as a government reserve. However, South Korea’s central bank stands aligned with the more cautious perspectives of institutions like the European Central Bank, Japan, and Switzerland, all of which have expressed reservations about bitcoin’s viability as a stable reserve currency.
Even as the BOK firmly dismisses the idea of a bitcoin reserve, South Korea is gradually adjusting its approach to the broader cryptocurrency market. The nation’s financial regulatory authorities are in the process of loosening some of the strict controls previously placed on digital assets. These steps include lifting bans on institutional crypto trading and developing a new legal framework focused on regulating stablecoins. While these regulatory shifts indicate a willingness to engage more actively with the cryptocurrency sector, the prospect of holding bitcoin as a national reserve remains off the table.
