The Bank of Korea has ruled out the inclusion of Bitcoin in its foreign exchange reserves, citing concerns over the crypto’s price volatility.
In response to a March 16 inquiry from Representative Cha Gyu-geun of the National Assembly’s Planning and Finance Committee, the central bank pointed out the risks of Bitcoin’s price fluctuations, which can make it an unreliable asset for reserves.
It marks the first time the central bank has clarified its position on the potential use of the crypto for national reserves, emphasizing its “cautious” approach while dealing with the asset.
The central bank’s statement comes amid ongoing international discussions about the role of crypto in national reserves following U.S. President Donald Trump’s recent executive order to establish a strategic “crypto reserve,” with Bitcoin (BTC) and Ethereum (ETH) at its heart.
Currently, Bitcoin is trading at approximately $83,450, marking a 23% decline from its peak of $109,000 in January, according to CoinGecko.
“If the virtual asset market becomes unstable, there is a concern that transaction costs will increase rapidly in the process of converting Bitcoin into cash,” a spokesperson for the central bank said, according to reports in local media.
The Bank of Korea also said the world’s largest crypto does not meet the International Monetary Fund’s (IMF) criteria for foreign exchange reserves.
The IMF requires foreign exchange reserves to be liquid, marketable, and in convertible currencies with investment-grade credit ratings—requirements that Bitcoin does not fulfill, the bank said.
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ToggleBitcoin reserves in Asia
Just last week, a seminar hosted by the Democratic Party of Korea discussed the possibility of including Bitcoin in the country’s foreign exchange reserves, just a day before President Trump signed his executive order.
Meanwhile, South Korea’s closest neighbour, Japan, has also shown hesitancy regarding the inclusion of Bitcoin in foreign reserves.
Last December, Japan Prime Minister Shigeru Ishiba voiced concerns about insufficient information on the U.S. and other countries’ plans for Bitcoin reserves.
Ishiba’s concerns followed a proposal by Satoshi Hamada, a member of Japan’s House of Councilors, suggesting Japan explore converting a portion of its foreign reserves into Bitcoin.
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