Bank of Korea (BOK) Rejects Bitcoin Reserve Due to Price Volatility

The Bank of Korea (BOK) has rejected including Bitcoin in its foreign exchange reserves, citing significant concerns regarding its inherent volatility and associated liquidity risks.

This decision, communicated in response to a formal inquiry from Representative Cha Gyu-geun on March 16th, 2025, represents a firm stance against integrating cryptocurrencies into the nation’s core financial assets.

The BOK’s official statement highlights a cautious approach, prioritizing financial stability and adherence to established international standards over speculative ventures into the cryptocurrency market.

Bank of Korea Fears Bitcoins Price Volatility

The Bank of Korea (BOK) says Bitcoin’s price is too unstable to be a reserve asset. Recent price swings, from a high of 160 million won to a low of 110 million won quickly, highlight the significant risks of holding it.

The BOK says this risk is worse because of high fees during market trouble. This hurts the easy trading needed for good reserve management. Moreover, Bitcoin’s 15% drop since February 16th (between $98,000 and $76,000, settling around $83,000) is a good example of this problem. The bank asserted that Bitcoin could even lose all its value, which is a risk too considerable for national reserves.

The BOK’s view matches the International Monetary Fund’s (IMF) rules for foreign exchange reserves. These rules say reserves must be easily traded and sold and in a reliable currency. Bitcoin doesn’t meet these rules.

The BOK says it hasn’t even discussed using Bitcoin in reserves because there’s no good reason to. This is different from some South Korean crypto groups and the Democratic Party, which want to use Bitcoin and create a stablecoin tied to the won. But the BOK prefers proven stability.

Trump Establishes U.S. Bitcoin Reserve

The BOK’s decision contrasts the recent executive order issued by U.S. President Donald Trump to establish a strategic Bitcoin reserve. While acknowledging global discussions on the role of Bitcoin in national reserves, the BOK emphasizes the need for a conservative approach.

The bank cited the negative positions of numerous central banks, including the European Central Bank, the Swiss National Bank, and the Japanese government, highlighting a global trend of caution regarding cryptocurrency inclusion in official reserves.

While the potential for the IMF to approve stablecoins as foreign exchange reserves is acknowledged as potentially market-altering, it does not alter the BOK’s position on Bitcoin’s unsuitability.