Bank of Korea Rules Out Bitcoin as a Strategic Reserve Asset

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The Bank of Korea (BOK) has confirmed that it will not consider adding Bitcoin (BTC) to its foreign exchange reserves, primarily due to concerns over the cryptocurrency’s intense price volatility and its failure to satisfy the International Monetary Fund’s (IMF) foreign exchange reserve management standards.

In response to an inquiry from Rep. Cha Gyu-geun of the National Assembly Planning and Finance Committee, the BOK mentioned that Bitcoin’s price instability could create high transaction costs when converting it to cash, putting the stability of the country’s reserves at risk. 

BOK also noted that Bitcoin does not align with IMF standards, which stress prudent management of liquidity, market, and credit risks.

Bitcoin’s Volatility and Reserve Criteria  

The BOK clarified that for an asset to qualify as a strategic reserve, it must demonstrate stability, liquidity, and ease of convertibility. Bitcoin, however, remains highly volatile, with price changes sometimes exceeding 10% per day, making it unsuitable as a reserve asset under current financial mechanisms. 

The IMF requirements require that reserve assets should be a stable store of value and easily accessible during periods of financial crises. Bitcoin’s speculative nature and unpredictable market behavior make it incompatible with these requirements.  

Additionally, the BOK noted that cryptocurrencies like Bitcoin are not widely accepted as settlement instruments in international trade, limiting their practical utility as a reserve asset.  

Global Context and Market Impact

South Korea’s action comes as other countries seek to leverage the potential of Bitcoin as part of their financial strategy. Recently, U.S. President Donald Trump signed an executive order to establish a strategic Bitcoin reserve and digital asset stockpile, a shift in how governments see and approach digital currencies.

Despite South Korea’s active cryptocurrency market, the BOK remains cautious. The central bank maintains that its reserves should consist of assets that are liquid, easily convertible, and have investment-grade credit ratings — criteria that Bitcoin has yet to meet.  

Bitcoin was trading at around $83,687 as of March 17, 2025, down approximately 0.39% in the last 24 hours. 

South Korea remains a major player in the global cryptocurrency space with active institutional and retail investor participation. The BOK’s action, however, is a testament to the widespread skepticism among central banks regarding Bitcoin’s prospects as a long-term strategic reserve asset.