- The Bank of Korea rejects Bitcoin as a foreign reserve due to price volatility and associated financial risks.
- Experts suggest South Korea explore a won-based stablecoin to bridge traditional finance with digital assets.
The Bank of Korea (BOK) has not considered including Bitcoin (BTC) in its foreign exchange reserves. High price volatility and the possibility that this posture could upset the financial stability of the nation form the foundation of it.
Nonetheless, certain South Korean legislators and financial analysts have started advocating for discussions on the ginseng nation’s considering this move.
According to Korea Economic TV, the Bank of Korea (BOK) stated that it has never considered including Bitcoin in its foreign exchange reserves and believes a cautious approach is necessary. BOK pointed out that Bitcoin’s price is highly volatile, and in times of market…
— Wu Blockchain (@WuBlockchain) March 17, 2025
Foreign Reserves and the Bitcoin Dilemma for BOK
Actually, it is not surprising that the BOK chose not to include Bitcoin within its foreign exchange reserves. Stability is the first concern for a central bank. Bitcoin is not fit for foreign currency reserves, which ideally should be liquid and steady because of its price swings that could spike or fall in a few hours.
Conversely, some might contend that diversifying foreign exchange reserves using digital assets like Bitcoin would be a novel approach. Advocates of this concept contend that over time BTC might serve as a hedge against declining currencies and offer access to a larger worldwide financial environment.
South Korea’s Changing Stance on Crypto Regulations
Though it hasn’t yet let BTC open the door as a foreign exchange reserve, South Korea seems to be warming her relationship with the cryptocurrency sector.
After earlier placing a seven-year prohibition on the financial instrument, CNF reported that the nation intends to open a crypto ETF in 2025. This indicates that as part of their financial system authorities are beginning to understand the industry’s potential.
Furthermore, the government intends to enforce tougher rules on cross-border transactions using digital resources. Starting in the second half of 2025, this step seeks to stop financial crimes, particularly crypto-based money laundering.
Regulatory Gaps Highlight Risks in Digital Assets
The high number of criminal cases involving digital assets is one of the primary factors making the BOK dubious of Bitcoin. Recently, officials in South Korea detained 215 individuals engaged in a 320 billion won (about $228.4 million) crypto investment fraud.
Promising investors large profits and selling 28 varieties of virtual tokens that proved to be useless, their approach was somewhat traditional.
This example supports even more the opinion that security and regulation in the crypto sector still show huge shortcomings. The BOK must make sure that every asset in its foreign exchange reserves has a reasonable level of risk, hence this is absolutely a major issue for it.
A Progressive Approach: The Case for a Won Stablecoin
Although the Bank of Korea has not yet promised to use Bitcoin in its foreign exchange reserves, the demand from several angles keeps on.
According to experts, South Korea might adopt a more progressive stance by, say, creating a won-based stablecoin to link the traditional financial system with the world of digital assets.
