South Korea's central bank has dismissed the possibility of using Bitcoin as a reserve, citing its volatility and non-compliance with international financial standards.
Central Bank's Decision
In response to a written question from a member of the National Assembly Strategy and Finance Committee, the Central Bank announced that it does not consider Bitcoin as a reserve asset. The bank stressed that the significant transaction costs associated with converting Bitcoin into cash could pose a risk to financial stability. Additionally, the bank referred to the International Monetary Fund's guidelines on foreign exchange reserve management, which emphasize prudent control of liquidity and credit risks.
Comparison with Other Countries
Discussions regarding national Bitcoin reserves gained momentum after US President Donald Trump signed an executive order to create a Strategic Bitcoin Reserve. However, South Korea remains skeptical. The central bank’s position aligns with Japan, Switzerland, and the European Central Bank, all of whom have been wary of accepting Bitcoin as part of their foreign exchange reserves.
Cryptocurrency Regulation in South Korea
Despite rejecting Bitcoin as a reserve asset, South Korea is taking steps to ease strict crypto regulations. The country’s financial authorities are gradually lifting restrictions on institutional crypto trading and are preparing a second legal framework focused on stablecoin regulation. As the country balances crypto market growth with regulatory oversight, the debate over Bitcoin’s role in national reserves is likely to continue.
South Korea's central bank, along with other major central banks, continues to be cautious about adopting Bitcoin as a reserve asset, even amidst ongoing evolution in the country's cryptocurrency regulations.
