Crypto News: Bank of Korea Rejects Bitcoin for Foreign Exchange Reserves

The Bank of Korea (BOK) has firmly stated that it has “never reviewed” the inclusion of Bitcoin in the country’s foreign exchange reserves. In a response to a written inquiry from Rep. Cha Gyu-geun of the Democratic Party of Korea on March 16, the BOK opened up about the need for caution when considering Bitcoin as part of the country’s financial assets.

This marks the first time the BOK has officially addressed the issue. According to Korea Economic TV, the central bank cited Bitcoin’s extreme price volatility as a major concern. The price of Bitcoin has seen sharp fluctuations recently, soaring to 160 million won in January, before falling to 110 million won. Despite predictions of potential future growth, some experts warn that Bitcoin’s value could drop to zero at any time.

Bitcoin Fails to Meet IMF Reserve Standards

The BOK explained that such instability could lead to increased transaction costs when converting Bitcoin into cash, particularly during periods of market turmoil. Additionally, the bank pointed out that Bitcoin does not meet the International Monetary Fund’s (IMF) standards for foreign exchange reserves. According to the IMF, foreign exchange reserves must be liquid, marketable, and expressed in a convertible currency with a high credit rating.

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The Bank of Korea further stated that, to date, no discussions or reviews have taken place regarding Bitcoin’s inclusion in reserves. They said, 

“There has been no discussion or review of Bitcoin’s inclusion in foreign exchange reserves so far. It is known that some countries, such as the Czech Republic and Brazil, have expressed positive opinions, but the European Central Bank ( ECB ), the Swiss National Bank, and the Japanese government have expressed negative opinions.”

This announcement comes amid broader global debates, with U.S. President Donald Trump Donald Trump Donald Trump is an American former president politician, businessman, and media personality, who served as the 45th president of the U.S. between 2017 to 2021. Trump earned a Bachelor of science in economics from the University of Pennsylvania in 1968. Trump won the 2016 presidential election as the Republican Party nominee against Democratic Party nominee Hillary Clinton while losing the popular vote. As president, Trump ordered a travel ban on citizens from several Muslim-majority countries, diverted military funding toward building a wall on the U.S.–Mexico border, and implemented a family separation policy. Trump has remained a prominent figure in the Republican Party and is considered a likely candidate for the 2024 presidential election President recently signing an executive order for a strategic Bitcoin stockpile, although this would involve only Bitcoin seized through legal processes, not new federal purchases.