South Korea Dismisses Bitcoin as Reserve Asset, Citing Volatility and Liquidity Risks
The Bank of Korea (BOK) has confirmed that Bitcoin (BTC) will not be considered for inclusion in its foreign exchange reserves, citing significant price volatility and liquidity concerns, according to a Korea Economic Daily report.
In response to a National Assembly Strategy and Finance Committee inquiry, the BOK stated on Sunday that it has no plans to hold BTC, reinforcing its cautious stance on cryptocurrency adoption at an institutional level.
Bitcoin Fails to Meet Key Reserve Criteria
The BOK expressed concerns over Bitcoin’s sharp price swings, noting that such volatility could inflate transaction costs and expose reserves to unnecessary risk when converting BTC into fiat currency.
Additionally, the central bank pointed to the International Monetary Fund’s (IMF) guidelines, which stress the need for stable liquidity, creditworthiness, and predictable market behavior—factors that Bitcoin, with its fluctuating value, does not meet.
Crypto Sector Booms Despite Government Caution
While the BOK remains wary of Bitcoin as a reserve asset, South Korea continues to thrive as a leading crypto hub, with local exchanges and blockchain firms generating billions in daily trading volume.
As of Monday afternoon in Asia, Bitcoin was trading at $83,400, down 1% in the last 24 hours.
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