On March 17, 2025, the Bank of Korea (BOK) made its first official statement regarding Bitcoin’s potential inclusion in its national reserves. The central bank dismissed the idea outright, citing concerns over volatility, liquidity, and usability—key factors that determine a currency’s suitability as a reserve asset.
Why South Korea Is Not Interested in a Bitcoin Reserve
Earlier this month, South Korea’s Democratic Party urged the Bank of Korea to explore the potential of adding Bitcoin to its reserves, following moves by the U.S. government to consider a Strategic Bitcoin Reserve. However, the BOK’s response was clear and negative.
The central bank’s main argument against holding BTC is its high volatility. According to the BOK statement, Bitcoin’s price trajectory resembles a roller coaster, making it unsuitable as a stable reserve. A reserve asset must be readily available, easily liquidated, and denominated in a currency with a high credit rating—criteria that Bitcoin does not meet.
Additionally, the BOK pointed to the reluctance of other major economies to adopt Bitcoin in their reserves. While Brazil and the Czech Republic have experimented with Bitcoin reserves, countries like Japan, Switzerland, and the European Central Bank (ECB) have firmly rejected the idea. The South Korean central bank emphasized that, despite global discussions about a “crypto race,” many governments remain cautious about Bitcoin’s role in national financial security.
Crypto Adoption in South Korea
Despite its rejection of Bitcoin as a reserve asset, South Korea is one of the world’s largest crypto-friendly economies. The country has a well-regulated crypto market, where exchanges like Upbit, Bithumb, and HTX operate legally. Interestingly, South Korea does not classify cryptocurrencies as money, and capital gains from crypto are not taxed.
South Korea’s youth demographic has a strong affinity for digital assets. Given the nation’s high unemployment rates and political uncertainty, many young investors view crypto as an alternative path to financial independence. A 2021 survey revealed that nearly 50% of South Koreans in their 30s were investing in cryptocurrencies.
This context suggests that South Korea’s rejection of Bitcoin as a reserve asset is not an anti-crypto stance but rather a cautious approach by a government that generally supports digital asset innovation.
Why Other Countries Reject Bitcoin as a Reserve Asset
The global rejection of Bitcoin as a reserve currency is based on similar arguments. The Czech National Bank had proposed spending billions on Bitcoin to diversify its reserves, but this was met with skepticism from European regulators.
- ECB President Christine Lagarde dismissed Bitcoin as unfit for the European Central Bank’s reserves, citing its lack of safety and liquidity.
- Japan rejected Bitcoin due to its price volatility and incompatibility with existing financial frameworks.
- Swiss National Bank President Martin Schlegel called Bitcoin a “niche phenomenon”, stating that its high volatility and low liquidity disqualify it as a reserve asset.
Crypto Advocates Challenge Central Banks’ Stance
Crypto enthusiasts argue that governments fail to grasp Bitcoin’s long-term potential. Some believe that central banks are missing a major opportunity by rejecting BTC reserves.
- Australian Reserve Bank Governor Michele Bullock admitted in November 2024 that she does not fully understand Bitcoin but still dismissed its role in the national economy.
- Crypto investors argue that rejecting Bitcoin in 2025 is akin to “shorting the internet in 2000”, implying that central banks are making a bold and risky move by ignoring its potential.
The U.S. Strategic Bitcoin Reserve: A Game Changer?
Despite the global skepticism, the United States has taken a bold approach, exploring the creation of a Strategic Bitcoin Reserve. However, this move has not triggered a domino effect—other nations have not rushed to follow suit.
Crypto advocate Michael Saylor has been vocal about Bitcoin’s importance as a reserve asset, but many central banks remain unconvinced. Their traditional approach favors stable, liquid, and credit-rated assets, and Bitcoin’s lack of alignment with these standards keeps it on the sidelines.
A Divided Approach to Bitcoin Reserves
South Korea’s rejection of Bitcoin as a reserve currency aligns with the global hesitation surrounding crypto as a national financial asset. While some countries explore Bitcoin adoption, major central banks remain conservative, opting for traditional reserves with more stability and liquidity.
With the U.S. government taking calculated risks in exploring Bitcoin reserves, only time will reveal whether this move will position the U.S. as a leader in the digital asset economy or validate the cautious stance of other global central banks.
