Bank of Korea to Take ‘Cautious Approach’ to Bitcoin Reserve

The Bank of Korea (BOK) has reaffirmed its stance on digital assets, signalling a cautious approach toward incorporating Bitcoin (BTC) into its reserves.

Overview

In a March 16 2025, response to a written inquiry, officials from the Korean Central Bank stated that they have not considered establishing a BTC reserve due to its high volatility. In response to a question from Representative Cha Gyu-geun of the National Assembly’s Planning and Finance Committee, central bank officials revealed that they have not discussed or evaluated the potential inclusion of BTC in foreign exchange reserves. According to the Korean Herald, they emphasised the need for a cautious approach. The central bank said, “Bitcoin’s price volatility is very high.” 

They added, “In the case of cryptocurrency market stability, transaction costs to cash out Bitcoins could rise drastically.” While central banks worldwide explore the potential of cryptocurrencies, South Korea’s financial authority is hesitant to embrace BTC as a reserve asset, citing concerns over volatility, regulatory uncertainties, and macroeconomic stability. BTC’s growing adoption as a store of value and hedge against inflation has prompted discussions on whether central banks should hold digital assets in their reserves. Some countries, such as El Salvador, have already integrated BTC into their financial frameworks. However, the BOK remains doubtful about following a similar path, opting for a more measured evaluation of the crypto’s long-term implications.

Regulatory Concerns and Market Volatility Hinder Bitcoin Adoption

One of the primary reasons behind the Bank of Korea’s reluctance to adopt BTC as a reserve asset is the volatile nature of crypto markets. BTC’s price fluctuations have raised concerns about its reliability as a stable store of value. Unlike traditional reserve assets such as gold or foreign currencies, BTC’s price is highly speculative, which could expose the country’s financial system to unnecessary risks. Additionally, regulatory challenges significantly influence the central bank’s cautious stance. 

South Korea has implemented strict policies on crypto exchanges, enforcing Know Your Customer (KYC) and Anti-Money Laundering (AML) measures. The government’s commitment to maintaining financial stability means any move toward incorporating BTC into national reserves would require extensive regulatory frameworks and international cooperation.

Future Consideration for Digital Asset Integration

Despite its cautious approach, the Bank of Korea acknowledges the growing influence of digital assets in the global financial system. The institution is actively researching Central Bank Digital Currencies (CBDCs) as a potential alternative to traditional cryptocurrencies. By developing a digital won, South Korea aims to harness blockchain technology while maintaining regulatory oversight and economic stability.

The global trend of institutional BTC adoption has sparked discussions on the role of digital assets in national economies. While South Korea remains hesitant to integrate BTC into its reserves, ongoing research and market developments may influence future policy decisions. The Bank of Korea’s approach reflects a broader trend among central banks prioritising financial stability over rapid crypto adoption.

While Bitcoin continues to gain traction as an alternative asset, the Bank of Korea is not yet ready to include it in its reserves. The institution remains focused on mitigating risks associated with volatility and regulatory challenges while exploring the potential of digital financial innovations. As the global financial landscape evolves, South Korea’s stance on Bitcoin reserves may adapt, but a cautious approach remains the priority.