BoK’s Stance on Bitcoin
The Bank of Korea has ruled out Bitcoin (BTC) as a foreign exchange reserve asset, citing volatility and non-compliance with International Monetary Fund (IMF) standards. The decision came in response to a March 16 inquiry from Representative Cha Gyu-geun of the National Assembly’s Planning and Finance Committee.
Bitcoin’s price swings remain a major concern. Coingecko data shows BTC trading at around $83,450, down 23% from its January peak of $109,000. The BoK warns that such volatility could increase transaction costs when converting Bitcoin to cash.
IMF Standards and Institutional Views
The BoK emphasized that Bitcoin does not meet IMF guidelines, which require reserve assets to be liquid, marketable, and denominated in a convertible currency with an investment-grade credit rating. Similar concerns have been echoed by the European Central Bank (ECB) and Swiss National Bank.
Despite rising global interest, the BoK stated it has “neither discussed nor reviewed” adding Bitcoin to its reserves.
Crypto Debate in South Korea
While the BoK maintains its stance, South Korean lawmakers continue discussions on Bitcoin’s potential role in national reserves. The ruling Democratic Party of Korea recently hosted a seminar on the topic, aligning with former U.S. President Donald Trump’s executive order to establish a strategic digital asset reserve.
South Korea’s Cautious Approach
South Korea’s reluctance to adopt Bitcoin as a reserve asset is shaped by its financial history. The country’s 1997 financial crisis led to a $58 billion IMF bailout, reinforcing conservative fiscal policies. Today, South Korea holds about $410 billion in reserves, prioritizing stability over speculative assets.
Despite this, South Korea remains a key player in the cryptocurrency market, with roughly 30% of its population actively trading digital assets. As global adoption grows, pressure may mount on South Korea to revisit its position.
Conclusion: Future Policy Shifts?
For now, the Bank of Korea has rejected Bitcoin as a reserve asset. However, ongoing discussions and increasing global adoption could influence future policy changes. As the U.S. and El Salvador embrace Bitcoin, South Korea’s stance may face heightened scrutiny in the years ahead.
