- The Bank of Korea rejects Bitcoin reserves, citing high volatility and transaction cost concerns.
- Global sentiment on Bitcoin reserves remains divided, with major economies exercising caution.
Amid the growing discussion around a Strategic Bitcoin [BTC] Reserve in the United States, fueled by President Donald Trump’s endorsement, several other nations have also begun evaluating the idea.
While some U.S. states have embraced the initiative, others have firmly rejected it.
South Korea halts Bitcoin Reserve
On the 16th of March, the Bank of Korea (BOK) clarified its position on Bitcoin in foreign exchange reserves. The central bank stated that it has “neither discussed nor reviewed” Bitcoin’s inclusion in such reserves.
This response came after a written inquiry by Representative Cha Gyu-geun of the National Assembly. The Bank of Korea highlighted Bitcoin’s extreme volatility as the main reason for its reluctance.
Bitcoin’s price volatility is very high,” the central bank noted, before adding that “in the case of cryptocurrency market instability, transaction costs to cash out Bitcoins could rise drastically.”
The BOK further emphasized that “a cautious approach is needed,” reinforcing its position that the cryptocurrency’s price fluctuations make it unsuitable for reserve holdings.
Adding to the discussion, a spokesperson for the central bank said,
“If the virtual asset market becomes unstable, there is a concern that transaction costs will increase rapidly in the process of converting Bitcoin into cash.”
This coincided with Bitcoin’s recent price action, where the cryptocurrency was struggling to regain momentum after previously surpassing the $100,000 mark.
At press time, BTC was finding it difficult to break past $90,000, trading at $83,414.13 following a 0.43% dip in the past 24 hours, according to CoinMarketCap.
Other countries that have followed South Korea’s suit
However, despite growing interest in Bitcoin reserves, global sentiment remains divided, with key economies exercising caution.
South Korea’s hesitancy mirrors that of Japan, where Prime Minister Shigeru Ishiba previously expressed concerns over the lack of transparency surrounding the U.S. and other nations’ Bitcoin reserve strategies.
This skepticism was further reinforced by Switzerland and the European Central Bank, both of which have taken a cautious stance.
Polymarket trend on U.S. Bitcoin Reserve
Meanwhile, market confidence in Trump’s Bitcoin reserve initiative remains lukewarm. Polymarket data shows only a 29% chance of Trump creating a Bitcoin reserve within 100 days.
This reflects doubts despite his executive order on the 6th of March to establish a Strategic Bitcoin Reserve. The reserve would use BTC seized from criminal and civil proceedings.
Thus, as nations debate Bitcoin’s role in financial systems, uncertainty continues to influence global crypto adoption.
