South Korea's Central Bank Dismisses Bitcoin as a Foreign Exchange Reserve

Bank of Korea Rules Out Bitcoin in Forex Reserves

South Korea’s central bank has dismissed the possibility of incorporating Bitcoin into its foreign exchange reserves, citing concerns over market stability and liquidity.

Responding to an official inquiry from lawmaker Cha Kyu-geun, the Bank of Korea (BOK) made it clear that it has “not discussed or reviewed” adding Bitcoin to its reserves.

The bank emphasised that foreign exchange reserves should be readily accessible and reliable, warning that Bitcoin’s volatility could lead to “transaction costs increasing quickly for those trying to convert Bitcoin to fiat” in times of market instability.

Bitcoin also fails to meet the International Monetary Fund’s (IMF) foreign exchange reserve standards, which require assets to maintain liquidity, market stability, and an investment-grade credit rating, the BOK explained.

Political Debate Grows Over National Crypto Reserves

The rejection comes at a time when the idea of a South Korean strategic Bitcoin reserve is gaining political traction.

Some members of the Democratic Party (DP) recently raised the possibility of adding Bitcoin to the country’s forex portfolio, aiming to position South Korea alongside nations like Brazil and the Czech Republic, where officials have expressed interest in such reserves.

The DP’s proposal surfaced during a policy seminar on 6 March 2025, reflecting broader discussions on digital assets.

With South Korea’s political landscape uncertain—particularly as impeachment proceedings against President Yoon Seok-yul continue—both the DP and the ruling People Power Party have been engaging younger voters with pro-crypto rhetoric.

Meanwhile, the Rebuilding Korea Party, which holds 12 seats in the National Assembly, has also been vocal in pushing for greater crypto adoption.

However, despite political interest, the central bank remains firm in its scepticism.

Cautious Approach in Line With Global Trends

South Korea’s position mirrors the cautious stance taken by major financial institutions worldwide.

The BOK pointed out that the European Central Bank, the Swiss National Bank, and Japan’s government have all expressed similar reservations about stockpiling Bitcoin.

While some countries are warming up to the idea of a Bitcoin reserve—especially after the United States announced its own Strategic Bitcoin Reserve—others remain wary.

The BOK’s reluctance aligns with South Korea’s overall regulatory approach, which has been gradually evolving but remains conservative.

Crypto Regulations in South Korea Evolving Slowly

Despite ruling out Bitcoin reserves, South Korea has been taking steps to refine its crypto regulations.

The Financial Services Commission (FSC), the country’s top financial watchdog, has been easing restrictions on institutional crypto trading and developing a second legal framework focused on stablecoins.

Additionally, policymakers are considering allowing cryptocurrency exchange-traded funds (ETFs), which could introduce new opportunities in the financial sector.

The chairman of the Korea Exchange has suggested that ETFs could provide institutional investors with more accessible exposure to digital assets.

For now, however, Bitcoin remains off the table for South Korea’s foreign exchange reserves, with authorities stressing the need for caution amid ongoing market uncertainty.