South Korea Rejects Bitcoin as Foreign Exchange Reserve, What’s the Reason?

Jakarta, Pintu News – The Bank of Korea recently confirmed that it will not include Bitcoin BTC->Current BTC PriceRp 0Market Cap-Trading Volume-Circulating Supply- in its foreign exchange reserves.

The decision was announced following National Assembly members’ written questions, highlighting high volatility and non-conformity with International Monetary Fund (IMF) criteria. This decision reflects the cautious stance of other major central banks worldwide.

Check out the full news below!

Volatility and IMF Criteria

According to the Crypto Times, the Bank of Korea highlighted that Bitcoin (BTC) has extremely high volatility that could disrupt financial stability. They are concerned that transaction fees to cash out Bitcoin (BTC) could increase drastically if the crypto market experiences instability.

In addition, Bitcoin (BTC) does not meet the criteria set by the IMF for foreign exchange reserves. The criteria include liquidity, market stability, and a credit rating of at least investment grade. The Bank of Korea also emphasizes that reserve assets must be reliable in maintaining economic stability.

They argue that Bitcoin’s (BTC) highly volatile and unpredictable nature makes it unsuitable as a store of value or as a stable medium of exchange. This is the main reason why Bitcoin (BTC) is not considered to meet the standards required to be part of foreign exchange reserves.

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Global Comparisons and Domestic Policies

While some countries, such as Brazil and the Czech Republic, are open to the idea of crypto reserves, the Bank of Korea has chosen to take a more cautious approach. The bank stated that there has been no formal discussion or review of the possibility of including Bitcoin (BTC) in foreign exchange reserves.

Other major financial institutions, such as the European Central Bank, Swiss National Bank, and Japanese financial authorities, maintain this sceptical stance. On the other hand, South Korea is gradually loosening crypto regulations.

The country’s financial supervisory authority is working to lift restrictions on institutional crypto trading and is preparing a second legal framework focused on stabilising stablecoins. These moves show that while cautious, South Korea remains open to integrating new financial technologies into its financial system.

Also read: 4 Crypto Rivals of XRP to Hunt Before Crypto Strategic Reserve Bill Passed!

Future Potential and Crypto ETFs

The discussion of crypto exchange-traded funds (ETFs) is also hot in South Korea. According to the chairman of Korea Exchange, crypto ETFs could bring new opportunities to the country’s financial sector. This suggests the possibility that even if Bitcoin (BTC) is not made a foreign exchange reserve, other crypto assets may have the potential to be integrated in the financial system in the future.

Policymakers are also considering allowing ETFs based on crypto exchanges. This move could pave the way for institutional and retail investors to engage more deeply in the crypto market in a more regulated and secure way. This signals that while there is caution, there is also recognition of the potential offered by crypto technology.

Conclusion

The Bank of Korea’s decision not to include Bitcoin (BTC) in its foreign exchange reserves shows a very cautious approach towards crypto assets.

Nonetheless, the progressive steps taken in regulation and the potential for crypto ETFs suggest that the door is still open for further integration of this new financial technology in the South Korean economy.

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*Disclaimer

This content aims to enrich readers’ information. Pintu collects this information from various relevant sources and is not influenced by outside parties. Note that an asset’s past performance does not determine its projected future performance. Crypto trading activities have high risk and volatility, always do your own research and use cold cash before investing. All activities of buying and selling bitcoin and other crypto asset investments are the responsibility of the reader.

Reference

• Crypto Times. Bank of Korea Rejects Bitcoin for Foreign Exchange Reserves. Accessed on March 18, 2025
• Crypto News. Bank of Korea: Bitcoin Doesn’t Meet Foreign Reserve Standards. Accessed on March 18, 2025
• Featured Image: Generated by Ai