The Bank of Korea Bitcoin decision has reaffirmed the central bank’s refusal to include Bitcoin in its foreign exchange reserves, citing extreme price volatility, liquidity constraints, and failure to meet International Monetary Fund (IMF) asset standards.
In a statement released this week, South Korea’s central bank emphasized that reserve assets must be “liquid, stable, and carry an investment-grade credit rating.” Officials noted Bitcoin’s recent 22% plunge — from $98,000 to $76,000 in just 30 days — as proof of its instability.
“Bitcoin lacks the stability and liquidity required for official reserves,” a Bank of Korea spokesperson said. “During periods of market stress, transaction costs rise sharply, and conversion to cash can be delayed — both of which are unacceptable for a reserve asset.”
While South Korea is home to one of the world’s most active crypto markets, its monetary authorities remain firmly aligned with traditional reserve assets such as U.S. dollars, euros, and Japanese yen. The decision mirrors positions taken by the European Central Bank and the Swiss National Bank, which have also flagged crypto’s volatility as a disqualifying factor for reserves.
The IMF’s reserve guidelines require assets to be highly liquid and carry minimal credit risk — a benchmark Bitcoin fails to meet, given its lack of sovereign backing and formal credit rating. Central banks argue that such volatility undermines the stability foreign reserves are meant to provide, particularly during economic shocks.
Some analysts believe this caution could mean missed opportunities. “Central banks may be underestimating Bitcoin’s long-term role as a hedge against fiat devaluation,” said Professor Kang Tae-soo of Seoul National University. “But for now, risk tolerance at the institutional level is close to zero.”
The Bank of Korea’s stance also underscores its focus on developing a Central Bank Digital Currency (CBDC) as a safer, state-backed alternative to decentralized cryptocurrencies. This measured approach signals that while blockchain technology will play a role in South Korea’s financial future, Bitcoin will remain outside official reserves for the foreseeable future.
