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The Bank of Korea (BOK) announced that it will not hold Bitcoin (BTC) 
$104,617 as a foreign reserve asset. The central bank of the world’s 11th largest economy cited the high volatility of Bitcoin as a reason for its exclusion from foreign exchange reserves. This decision was revealed in response to a written inquiry from a member of the National Assembly’s Strategy and Finance Committee.
Why BOK Does Not View Bitcoin as a Reserve Asset
According to the Korea Economic Daily, BOK believes that Bitcoin poses significant risks to financial stability. It has pointed out that high price fluctuations in the cryptocurrency market could lead to substantial cost increases during the selling process. This scenario would complicate the central bank’s liquidity management.
Additionally, the International Monetary Fund (IMF) guidelines for foreign reserve management do not classify Bitcoin as a suitable asset. The IMF advises central banks to manage their reserves by carefully controlling market liquidity, credit, and market risks. BOK believes that Bitcoin does not meet these criteria.
Other Countries and South Korea’s Cryptocurrency Policies
On March 6, U.S. President Donald Trump ordered the creation of a “Strategic Bitcoin Reserve” comprised of confiscated BTC. This decision has sparked discussions in some countries about establishing their own Bitcoin reserves. However, major financial institutions like Japan, Switzerland, and the European Central Bank remain skeptical of this approach. South Korea now joins these countries in its stance.
Despite this, South Korea has recently attracted attention for its steps toward softening cryptocurrency regulations. Regulatory bodies in the country plan to gradually lift the ban on cryptocurrency trading for institutional investors. Moreover, a second legal regulation package is being prepared, which is expected to focus particularly on the oversight of stablecoins.
