Key Points
- The Bank of Korea (BOK) rejects Bitcoin as a part of its foreign exchange reserves due to high volatility and transaction costs.
- Global sentiment towards Bitcoin reserves is divided, with several major economies exercising caution.
The Bank of Korea (BOK) recently confirmed that it has not considered including Bitcoin in its foreign exchange reserves. This comes in response to a written inquiry by Representative Cha Gyu-geun of the National Assembly.
BOK’s Stance on Bitcoin
The central bank cited the extreme price volatility of Bitcoin as a primary concern. It further noted that transaction costs could skyrocket in the event of instability in the cryptocurrency market. The BOK reiterated the need for a cautious approach, stating that the price fluctuations of the cryptocurrency make it unfit for reserve holdings.
A spokesperson for the bank expressed concerns about the potential for rapidly increasing transaction costs if the virtual asset market becomes unstable. This coincides with Bitcoin’s recent price action, where it struggled to regain momentum after previously surpassing the $100,000 mark. Currently, Bitcoin is finding it challenging to break past $90,000, trading at $83,414.13 after a 0.43% dip.
Global Sentiment on Bitcoin Reserves
Despite the growing interest in Bitcoin reserves, global sentiment is split. South Korea’s reluctance mirrors that of Japan, where Prime Minister Shigeru Ishiba voiced concerns over the lack of transparency in Bitcoin reserve strategies of the U.S. and other nations. This skepticism is further echoed by Switzerland and the European Central Bank, both adopting a cautious stance.
Meanwhile, market confidence in President Trump’s Bitcoin reserve initiative remains tepid. Polymarket data indicates only a 29% chance of Trump creating a Bitcoin reserve within 100 days, despite his executive order to establish a Strategic Bitcoin Reserve using BTC seized from criminal and civil proceedings. As nations continue to debate the role of Bitcoin in financial systems, uncertainty continues to shape global crypto adoption.
