The central bank of South Korea has announced that it will not add Bitcoin to its foreign exchange reserves.
On March 16, a local news report indicated that Bank of Korea officials responded to a query from Representative Cha Gyu-geun of the National Assembly’s Planning and Finance Committee, confirming the decision against incorporating Bitcoin (BTC) into the country’s reserves.
The central bank expressed concern over Bitcoin’s significant price fluctuations, noting that “transaction costs associated with cashing out Bitcoins could increase sharply” during periods of market instability.
Moreover, the officials highlighted that Bitcoin fails to fulfill the International Monetary Fund’s requirements for foreign exchange reserves, which stipulate that assets should ensure liquidity, market stability, and possess an investment-grade credit rating.
Global discussions regarding national cryptocurrency reserves have intensified, especially after the U.S. government’s move to create a Strategic Bitcoin Reserve. Some nations, like Brazil and the Czech Republic, have also shown a willingness to consider this approach.
Nevertheless, the Bank of Korea emphasized the importance of a “cautious approach,” pointing out that other institutions, including the European Central Bank, the Swiss National Bank, and Japan’s financial authorities, share a similar viewpoint.
The bank further stated that it has neither reviewed nor formally contemplated the inclusion of Bitcoin in its reserves.
According to the news report, certain members of the Korean Democratic Party have encouraged the central bank to investigate Bitcoin’s potential role within the nation’s financial landscape during a policy seminar held on March 6.
Earlier reports indicated a comparable position from the Financial Services Commission, with FSC Chairman Kim Byung-hwan acknowledging discussions on the idea of a national Bitcoin reserve but labeling it as premature back in November.
Despite this, South Korea has progressively relaxed its stance on cryptocurrency regulations. The financial regulatory body has been working on easing restrictions on institutional crypto trading and is formulating a second legal framework aimed at stablecoin regulation.
Policymakers are also exploring the possibility of permitting cryptocurrency exchange-traded funds, which, according to the chairman of the Korea Exchange, could introduce new opportunities for the nation’s financial industry.