Share

South Korea Rejects Bitcoin as Foreign Exchange Reserve

The South Korean government cited concerns over Bitcoin's volatility as the major reason behind its decision. 
Abigail Michelle
Last updated:
17 March 2025 @ 15:43 UTC
Why Trust CTW

CTW is a fresh voice in the world of cryptocurrency, offering clear and insightful coverage of the ever-evolving digital asset landscape. Backed by a team of passionate writers and crypto enthusiasts, we dive deep into market trends, emerging technologies, and innovative blockchain projects. We hope to become your go-to source for up-to-date information in this fast-paced industry.

south korea

Share

The South Korean government announced that it would not consider Bitcoin as a foreign exchange reserve, citing concerns over volatility, lack of regulation, and limited acceptance as major factors influencing its decision.

In response to a written query from Representative Cha Gyu-geun, a National Assembly’s Strategy and Finance Committee member, the central bank expressed concerns about Bitcoin’s suitability as a foreign exchange reserve.

South Korea Rejects Bitcoin Over Volatility Concerns

The bank stated that it “has neither discussed nor reviewed the possible inclusion of bitcoin in foreign exchange reserves” and that “a cautious approach is needed” to the matter. Specifically, it cited the cryptocurrency’s price volatility, which could result in substantial transaction costs when liquidating Bitcoin holdings.

Furthermore, the Bank of Korea added that Bitcoin fails to meet the International Monetary Fund’s (IMF) standards for foreign exchange reserve management, emphasizing prudent risk management across liquidity, market value, and credit rating.

America Says Yes to Bitcoin Reserves

South Korea’s rejection of Bitcoin as a foreign exchange reserve came a few days after the President of the United States, Donald Trump, signed an executive order to establish a Strategic Bitcoin Reserve in the country.

The Strategic Bitcoin Reserve will be formed from Bitcoins obtained by the federal government through asset seizures in connection with criminal or civil proceedings.

America’s establishment of a Bitcoin Reserve underscores the Trump administration’s dedication to embracing digital assets and fostering innovation in the sector. The move parallels El Salvador’s adoption of Bitcoin as legal tender as the country explores its potential as a foreign exchange reserve.

The Bank of Korea’s decision would likely have significant implications for the country’s financial policy and its approach to cryptocurrencies. As the global economic landscape continues to evolve, it remains to be seen how other countries will approach the subject of accepting Bitcoin as a foreign exchange reserve.

South Korea’s decision to reject Bitcoin as a foreign exchange reserve is not an isolated one. The United Kingdom’s Treasury Department had previously ruled out the possibility of establishing a strategic Bitcoin reserve, citing concerns over the crypto-asset’s historical volatility.

The decision was made public after Protos, a media outlet, inquired about the UK’s potential interest in introducing a BTC reserve following the US.

Abigail Michelle

Enter your email for our Free Daily Newsletter.

Newsletter Subscribers (Home Footer}