Bank of Korea Rejects Bitcoin for National Reserves

The Bank of Korea (BOK) has firmly dismissed proposals to include Bitcoin in its national reserves, despite growing pressure from cryptocurrency industry lobbyists and certain members of the Democratic Party of Korea. The debate over Bitcoin’s place in the country’s financial framework has intensified in recent months, as proponents advocate for its adoption as both a strategic asset and a foundation for a national stable currency.

Advocates of Bitcoin’s integration argue that adding the cryptocurrency to South Korea’s reserves could provide long-term economic benefits, including diversification of assets, enhanced digital financial infrastructure, and positioning South Korea at the forefront of global financial innovation. Some proponents even suggest that backing a stable currency with Bitcoin could offer a hedge against traditional market instability and inflationary risks associated with fiat currencies.

However, the central bank remains resolute in its opposition, emphasizing the necessity for reserve assets to possess specific financial characteristics: high liquidity, ease of accessibility, and an investment-grade credit rating. According to the BOK, Bitcoin fails to meet these criteria, primarily due to its extreme price volatility and speculative nature. The bank expressed concerns that Bitcoin’s price fluctuations could introduce unnecessary risk to South Korea’s financial stability, rather than strengthening the resilience of the country’s reserves.

Additionally, the BOK pointed out the lack of regulatory oversight in the global cryptocurrency market, which raises concerns about security, fraud, and systemic risks. While acknowledging the increasing global interest in digital assets, the bank maintains that traditional reserve assets such as foreign currencies, gold, and government bonds remain the most reliable and secure options for safeguarding the nation's financial stability.

The rejection of Bitcoin for national reserves aligns with the cautious stance taken by other central banks worldwide, most of which have refrained from integrating cryptocurrencies into their official reserves. Despite this resistance, the debate over Bitcoin’s role in national financial systems continues, with proponents arguing that digital assets could play a transformative role in the future of global finance.

For now, the Bank of Korea has made it clear that Bitcoin will not be included in its reserves, reinforcing its commitment to stability, liquidity, and prudence in financial policymaking.