The Bank of Korea (BOK) has ruled out the potential to include Bitcoin in its foreign exchange reserves on the grounds of price volatility and the fact that it does not meet the IMF standard. Earnings from reserves must be highly liquid, stable, and investment-grade regarding credit rating, none of which Bitcoin meets, according to BOK officials. This cautious position matches that of other leading central banks, including the European Central Bank and the Swiss National Bank.
Concerns Over Volatility and Liquidity
In a new response to a recent legislative inquiry, officials from the BTS Bank of Korea (BOK) claimed that the risks associated with Bitcoin’s extreme price volatility are significant. They cautioned that at times of market turmoil, transaction costs used to trade in Bitcoin for cash could rise dramatically.
They also pointed out that Bitcoin does not meet the IMF’s foreign exchange reserves criteria, which stipulate that an asset must be highly liquid and marketable as well as have an investment-grade credit rating. These elements serve as the rationale for BOK’s omission of Bitcoin.
Bitcoin Reserves
The Bank of Korea (BOK) adds caution to the growing list of implications of Bitcoin for sovereign wealth funds, as some other countries have eyed the idea of adding Bitcoin to sovereign wealth funds. BOK officials say the cryptocurrency’s volatility and regulatory uncertainties render it unsatisfactory as a reserve asset.
Other large financial institutions like the European Central Bank, the Swiss National Bank, and Japan’s Financial Services Agency have adopted a similar cautious attitude. These agencies have also voiced similar concerns about Bitcoin’s instability, insufficient liquidity, and noncompliance with international standards on reserve assets.
The Post-Bitcoin Price Movement
Bitcoin was also trading at about $82,610.62 on March 17, 2025, down 2.11% from a day earlier. Despite this latest decline, Bitcoin is still up 26.52% over the last 12 months. This price action highlights cryptocurrency’s fundamental volatility, which still has some financial regulators and central banks worried. If Bitcoin can continue this behavior, however, it is unlikely to be a strong candidate for foreign exchange reserves, where stability and liquidity are crucial.
Price Predictions and Market Outlook
Analysts have offered varied forecasts for Bitcoin’s trajectory:
| Analyst/Source | Price Prediction | Timeframe | Notes |
| Martin Leinweber, MarketVector Indexes | $150,000 | 2025 | Based on historical trends and Bitcoin’s cyclical patterns. citeturn0news23 |
| John Glover, Ledn | $125,000 | Q1 2025 | Contingent on favorable regulatory developments under the Trump administration. citeturn0news20 |
| Alex Thorn, Galaxy Digital | $150,000 – $185,000 | H1 2025 | Anticipates broader institutional and national adoption. citeturn0news21 |
Repercussions on the South Korean Economic Line
The BOK has been conservative, not holding erratic ingredients like Bitcoin in its foreign cash. This comes as most central banks globally are also adopting a watchful eye, as concerns over ensuring financial stability continue to grow.
While experts see the potential for innovation in the realm of digital assets, they also acknowledge the risks presented by price volatility and regulatory uncertainties. The BOK’s approach highlights a continuous challenge central banks are facing—a balance between technological speed and responsible financial management.
Conclusion
The Bank of Korea’s exclusion of Bitcoin from its foreign exchange reserves reaffirmed the uncertainty about the place of cryptocurrencies in traditional finance worldwide. Although digital asset reserve transfers, including Bitcoin, can provide value diversification and decentralized value storage benefits, extreme price volatility and regulatory uncertainties of these assets remain a major concern.
According to the European Central Bank and even the Swiss National Bank, financial stability—not speculative assets like bitcoin—is what central banks across the world are focused on. This conservative approach is indicative of the complex risk assessment involved in reserve asset management.
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Frequently Asked Questions
Why The Bank of Korea Dismissed Bitcoin as a Foreign Reserve Asset
The Bank of Korea pointed to Bitcoin’s extreme price volatility, lack of liquidity, and inability to meet IMF foreign reserve standards as major contributing factors.
Does Bitcoin qualify as a foreign exchange reserve according to international standards?
The answer is no; Bitcoin does not qualify for International Monetary Fund requirements, which expect reserves to be held in lively, sound, and investment-grade credit-rated assets.
Are other countries driving up the national security of Bitcoin?
The major central banks, including Europe and Japan, are also concerned, and they have not added Bitcoin to their reserves, like South Korea.
Will South Korea change its mind about Bitcoin as reserves in the future?
But unless Bitcoin’s volatility calms down and it receives wider regulatory acceptance, the Bank of Korea will have little reason to revisit its decision in the near term.
Glossary of Key Terms
1. Bitcoin (BTC): A type of digital currency that is decentralized and runs on a peer-to-peer network, enabling transactions without a central authority. If you have been following Bitcoin for a bit, you know its price can be volatile.
2. Central Bank: A national institution that manages a country’s monetary policy, currency stability, and foreign reserves. Bank of Korea (BOK) is South Korea’s central bank.
3. Credit Rating: An assessment of an asset’s or entity’s creditworthiness, which is often assigned by rating agencies. Reserve assets are usually expected to have security and stability that come with investment-grade ratings.
4. Foreign Exchange Reserves: Currency reserves are assets held by a central bank in foreign currencies or commodities, utilized to prop up the value of the country’s currency and settle international debts.
5. IMF (International Monetary Fund): An international organization aimed at fostering global monetary cooperation. It sets rules on foreign reserve assets, prioritizing liquidity, stability, and credit quality.
6. Liquidity: The ability to sell an asset quickly at a fair price. Foreign reserve assets must be highly liquid.
7. Price volatility: a measure of the price fluctuations of an asset over time. The volatility of bitcoin makes it a risky option for foreign reserves.
8. Stablecoin: A cryptocurrency that is designed to maintain a stable exchange rate by being pegged to some assets (such as a fiat currency). And other countries look at stablecoins for foreign reserves, not Bitcoin.
