South Korea’s Central Bank Rules Out Bitcoin for National Reserves

The Bank of Korea (BOK) has officially decided against including Bitcoin in its foreign exchange reserves, citing the cryptocurrency’s extreme volatility and its failure to meet the established criteria for reserve assets. The central bank emphasized that Bitcoin’s unpredictable price movements pose significant financial risks, making it an unsuitable choice for a national reserve. This decision aligns with South Korea’s traditionally cautious stance on cryptocurrency regulation, despite growing global interest in digital assets as strategic holdings.

According to reports, BOK officials expressed concerns that Bitcoin’s price fluctuations could lead to instability in the country’s reserves, especially during economic downturns or financial crises. The bank highlighted that in periods of extreme market stress, the cost of converting Bitcoin to fiat currency could increase substantially, making it difficult to rely on as a stable financial asset. Unlike traditional reserve assets such as the U.S. dollar, gold, or government bonds, Bitcoin’s value is not backed by a centralized entity, adding another layer of uncertainty to its long-term viability as a strategic reserve.

Additionally, the BOK underscored that Bitcoin does not align with the International Monetary Fund’s (IMF) guidelines for reserve assets. The IMF emphasizes the importance of liquidity, market stability, and credit risk management—areas where Bitcoin falls short due to its price volatility and speculative nature. While some countries, such as El Salvador, have integrated Bitcoin into their national financial strategies, South Korea’s central bank remains focused on maintaining stability within its monetary system rather than embracing the risks associated with digital currencies.

This decision comes at a time when global discussions on the role of Bitcoin in sovereign financial strategies are intensifying. Recently, the United States announced plans to establish a strategic Bitcoin reserve, fueling debates on the potential benefits and risks of such an approach. However, South Korea’s cautious position signals that not all major economies are ready to follow suit. The country continues to prioritize financial security over speculative investments, reinforcing its commitment to traditional asset management strategies.

As of March 17, 2025, Bitcoin is trading around $83,500, reflecting a 23% decline from its peak of $108,000 in January. This price drop further highlights the risks associated with using Bitcoin as a national reserve asset. While cryptocurrency adoption continues to grow globally, South Korea’s decision underscores the challenges digital assets face in gaining mainstream acceptance at the highest levels of financial governance.