South Koreas Central Bank Rejects Bitcoin for Reserves Due to High Risk and Price Swings
- The Bank of Korea (BoK) has stated that Bitcoin does not meet up with the national or IMF standards, making it impossible to become an asset reserve due to its price volatility.
- Despite different global discussions on crypto reserves, including U.S. President Donald Trumps strategic crypto reserve initiative, South Korea still remains very cautious, highlighting the financial stability risks.
The Bank of Korea (BoK) has come out to say that Bitcoin does not meet the requirements set by the nation and also the International Monetary Fund (IMF).
Due to this, it is not suitable to be held as a foreign reserve asset. The central bank emphasized that Bitcoin does not align with the IMFs criteria for classification as a reserve asset.
In response to an inquiry on the 16th of March from the Representative Cha Gyu-geun of the National Assemblys Planning and Finance Committee, the Bank of Korea (BoK) has stated the risks that are tied to BTCs price swings, making it unsuitable as a reserve asset.
South Korea Weighs Crypto Reserves Amid Bitcoin Volatility
The Bank of Korea officially clarified its stance on using cryptocurrency for national reserves, emphasizing that there should be a more careful approach when it comes to handling and discussing matters related to crypto currency. This announcement comes as global discussions continue on the role of crypto currency reserves, which is influenced by U.S. President Donald Trump.
Trump recently gave an order to create a strategic crypto reserve that is focused on Bitcoin, Ethereum, and other popular altcoins. Reports suggest that South Korean lawmakers have considered adding crypto national reserves, but Bitcoins unpredictable price remains an untackable issue.
As of the time of writing, BTC is trading at around $84,406, which shows a 23% drop from its all-time high of $109,000 in January. A central bank spokesperson warned that if the crypto market becomes unstable, the transaction costs could rise significantly when converting Bitcoin to cash.
Despite Koreas stance, nations like El Salvador and the United States have officially integrated Bitcoin into their economies. BoK has also stated that the instability of Bitcoin stands as a threat to the nations financial security.
Related: Crypto ETPs Suffer Massive $1.7B Outflow in Fifth Consecutive Week of Losses
Text source: TronWeekly
