- South Korea’s central bank has declared it is not considering adding Bitcoin to its foreign exchange reserves, emphasising the need for a “cautious approach” due to volatility.
- The BOK expressed concerns about potential transaction costs during market instability and noted that cryptocurrencies fail to meet IMF criteria for foreign exchange reserves.
- While the US pushes forward with a Strategic Bitcoin Reserve following Trump’s executive order, which Bitwise CIO Matt Hougan called a “game-changer”, most Americans remain sceptical.
- Political tensions in South Korea following former president Yoon Suk Yeol’s impeachment have potentially relegated blockchain and crypto reserve discussions to lower priority status.
According to Yonhap, South Korea’s central bank is not planning to join the international race to establish a Bitcoin reserve. It called for a “cautious approach” to the inclusion of Bitcoin in a foreign exchange reserve, citing volatility.
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The Bank of Korea (BOK) responded to questions, saying it had “neither discussed nor reviewed the possible inclusion of bitcoin in foreign exchange reserves”.
They also pointed to perceived market instability and worries about the ability to “cash out” Bitcoin under volatile conditions.
In the case of cryptocurrency market instability, transaction costs to cash out bitcoins could rise drastically.
Bank of KoreaThe bank also mentioned that cryptocurrencies do not meet criteria for foreign exchange reserves as stipulated by the International Monetary Fund (IMF).
US Reserve Push a “Game-Changer”, Says Analyst
Crypto stockpiles and Bitcoin reserves have increased in popularity since Trump had promised a Strategic Bitcoin Reserve at the 2024 Bitcoin conference in Nashville, Tennessee.
He has since issued an executive order (EO) to establish both a strategic reserve and a crypto stockpile. The EO has left many unhappy as it doesn’t specify how the US would buy more crypto and Bitcoin – saying it would need to explore ways to do this “budget neutral”.
Bitwise CIO Matt Hougan recently stated that the market was “overthinking” the EO, and that it is a “game-changer” for the industry.
Several US states are also in varying stages of discussions about crypto and Bitcoin reserves, with several bills already rejected. A recent survey also showed that not everyone is behind the asset class.
Most Americans are against the introduction of a crypto reserve at present, showing we are indeed still early in the adoption of crypto.
Reserve No Priority in East Asia
South Korea’s hesitancy comes at a time when the country struggles to maintain its political stability after former president Yoon Suk Yeol was impeached over a declaration of martial law.
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While political tension remains in the country, blockchain and discussions of crypto reserves are perhaps taking a back seat.
Korea’s neighbour to the east, Japan, has also shown restraint when it comes to the topic, with Shigeru Ishiba, the Prime Minister of Japan, saying they would watch closely what other countries including the US are doing.
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