Bank of Korea Seeks “Cautious Approach” Over Bitcoin Reserve Demand

The Bank of Korea (BOK) has dismissed plans to include Bitcoin (BTC) in the country’s national reserve amid a recent push from crypto enthusiasts. This comes on the heels of President Trump’s executive order for a United States strategic Bitcoin reserve. Recently, Korean authorities have opposed the idea of describing moves as immature. 

BOK Cites High Volatility

According to local media outlets, the central bank stressed a “cautious approach” in response to calls for a strategic Bitcoin reserve. Officials highlighted the digital asset’s high volatility leading to massive price swings as a key factor behind the bank’s stance. 

After the United States strategic Bitcoin reserve announcement, members of parliament urged the central bank to consider Bitcoin’s role in the country’s reserve. The bank’s response added that due to high volatility, the cost to withdraw assets might also skyrocket. 

“In the case of cryptocurrency market instability, transaction costs to cash out bitcoins could rise drastically…”

Furthermore, officials noted that the top crypto fails to meet the International Monetary Fund requirement for a reserve. Recently, countries like Brazil and the Czech Republic have shown signs of leaning toward a Bitcoin reserve while Japan, Switzerland, and the European Central Bank remain skeptical. 

This year, crypto prices have sharply dipped after a previous surge in Q4 2024. Bitcoin price nosedived over 22% from its all-time high above $108k, now trading at $83.200. Similarly, other crypto assets dropped within the same period as whales dumped huge assets. This short-term volatility often triggers cautionary warnings from traditional institutions. 

On the other hand, market bulls say the volatility holds prospects for growth and a hedge against inflation. The rise in price over the last five years has increased its global adoption. 

The United States Leads The Way

President Trump’s pro-Bitcoin policies impact the wider market as foreign authorities consider similar moves. During the campaigns, Trump vowed to make the United States the world’s crypto and artificial intelligence (AI) capital. Months into his second term, the United States has launched a strategic Bitcoin reserve alongside steps towards clear rules.

The previous administration remained opposed to the market amid criticism of stifling innovation. The United States’s new stance is expected to usher in a new wave of institutional investment in Bitcoin and other crypto assets.