South Korea’s Central Bank Rejects Bitcoin Reserve

Highlights:

• The Bank of Korea confirmed it has no plans to add BTC to its foreign reserves.
• Officials cited Bitcoin’s volatility, warning of high transaction costs during market downturns.
• South Korea is easing crypto rules, gradually lifting the ban on institutional trading.

The Bank of Korea (BOK) has officially stated that it has no intention of including Bitcoin (BTC) in its foreign exchange reserves. Responding to a written inquiry from a National Assembly Strategy and Finance Committee member on Mar. 16, the central bank raised concerns over Bitcoin’s high volatility.

BOK rules out inclusion of bitcoin in foreign exchange reserves https://t.co/5oHaYp2vom

— Yonhap News Agency (@YonhapNews) March 16, 2025

The BOK noted Bitcoin’s recent price swings, rising to 160 million won in January before falling to 110 million won. Some predict future growth, but experts warn it could drop to zero anytime. The central bank warned that such volatility could increase transaction costs when converting Bitcoin to cash, especially in market downturns.

The BOK stated:

“We have not discussed or reviewed the inclusion of Bitcoin in our foreign exchange reserves. If the virtual asset market becomes unstable, we are concerned that transaction costs will increase quickly for those trying to convert Bitcoin to fiat.”

The bank stated that it “must be cautious” about adding Bitcoin to its foreign exchange reserves. Additionally, BTC does not meet the International Monetary Fund’s (IMF) guidelines for foreign exchange reserve management. These guidelines require reserves to market, manage liquidity, and credit risks “in a prudent manner.”

The BOK noted that key political figures in some countries, such as the Czech Republic and Brazil, have expressed positive views on creating national Bitcoin reserves. However, it added that governments in other countries remain less interested. The BOK stated that the European Central Bank, the Swiss National Bank, and the Japanese government have all opposed the idea of holding Bitcoin reserves.

South Korea Eases Crypto Rules but Rejects Bitcoin Reserve

South Korea’s stance differs from the U.S., where President Donald Trump issued an executive order to create a Strategic Bitcoin Reserve. Despite the BOK’s cautious approach to crypto, the country continues to embrace a progressive outlook on the industry.

South Korea has been taking steps to ease its strict crypto regulations beyond the discussion of creating a Bitcoin reserve. The country’s financial watchdog is rolling out plans to gradually lift the ban on institutional crypto trading while preparing a second legal framework focused on stablecoin regulation.

Bitcoin Price Could Crash to $20K, Warns Peter Schiff

Bitcoin is struggling to break the $84,000 resistance level. Bearish sentiment is rising due to a sharp U.S. stock market correction. The NASDAQ index has dropped 12% recently amid a sharp U.S. stock market correction. Bitcoin’s price often moves with the Nasdaq. A 12% drop in Nasdaq could mean a 24% fall for Bitcoin, bringing it to around $65,000. 

If the Nasdaq drops 20%, BTC could decline to $55K. Schiff highlighted that the Nasdaq has seen even larger declines in the past, plunging nearly 80% during the Dot-com crash, 55% in 2008, and 30% in the 2020 COVID crash. Given the historical average of a 55% decline, Schiff predicts that a 40% drop in the Nasdaq index could drive Bitcoin down to $20K. He added, “A drop of this magnitude would likely accelerate Bitcoin’s collapse to much lower levels.” 

The NASDAQ is down 12%. If this correction turns out to be a bear market, and the correlation where a 12% decline in the NASDAQ equates to a 24% decline in Bitcoin holds, when the NASDAQ is down 20%, Bitcoin will be about $65K.

But if the NASDAQ goes into a bear market, history…

— Peter Schiff (@PeterSchiff) March 16, 2025