TLDR
- Korea's Central Bank has firmly decided not to include Bitcoin in its stockpile of foreign reserves.
- Authorities highlighted the erratic nature of Bitcoin's value and costly transactions in turbulent times.
- Bitcoin falls short of IMF standards for reserves, which require liquidity and a stable market presence.
- With the US setting up a Bitcoin reserve, global interest in cryptocurrency as a reserve has been rising.
- South Korea might soon ease up on crypto rules and consider approving Bitcoin exchange-traded funds.
The Bank of Korea Firmly excluding Bitcoin from reserves due to its unstable nature and liquidity issues. This decision arises amid intensified conversations worldwide about how such digital currencies fit into national finance plans.
On March 16, a response came from South Korea's central bank,
replying to an inquiry from National Assembly's Cha Gyu-geun of the Planning and Finance Committee. Officials clarified there had been no official discussions about incorporating Bitcoin into state reserves.
Bitcoin's value swings significantly, which was a major factor in the central bank's decision.
Over the past 30 days, Bitcoin prices danced between $98,000 and $76,000, finally stabilizing around $83,000.
Central bankers cautioned that cashing out Bitcoin could become very costly if the market turns turbulent.
Bitcoin's inadequacy in meeting the International Monetary Fund's criteria for reserves, with its liquidity, and market stability concerns.
The Bank of Korea insists that reserves must be instantly accessible. Bitcoin's instability under stress disqualifies it.
Professor Yang Jun-seok pointed out the necessity of aligning foreign exchange with major trading partners' currencies.
This stance by the central bank mirrors similar cautious approaches by global authorities like the ECB and the Swiss National Bank.
Despite internal calls, particularly from some political parties, the central decision remains firm against Bitcoin.
Since the US created a Strategic Bitcoin Reserve, many nations are keen to discuss their own crypto reserves.
Global Interest in Crypto Reserves
Countries like Brazil and the Czech Republic are warming up to potentially using Bitcoin as a reserve asset.
Professor Kang Tae-soo suggested the US might focus on stablecoins over Bitcoin for maintaining financial dominance.
While excluding Bitcoin, South Korea is easing crypto restrictions in other areas.
New policies might include a framework for stablecoin regulation, indicating a differentiated approach to digital assets.
There's also consideration to allow ETFs for cryptocurrencies, which could open new avenues for financial growth.
The Financial Services Commission shares the central bank's sentiments regarding Bitcoin reserves, labeling them early.
Editor-in-Chief at Blockonomi and founder of a UK-based media company, values the integration of open-source software, blockchain, and accessible internet.
