The US backs a Bitcoin reserve under President Trump
South Korea said the idea needed to be approached with caution
For now, South Korea has no plans to make BTC a reserved asset
South Korea has joined Switzerland in dismissing Bitcoin as a reserved asset
Photo Credit: Pixabay/ Big_Heart
South Korea's central bank is not considering Bitcoin to be included as part of its reserved assets. The Bank of Korea (BoK) has reportedly said that Bitcoin's volatility is a matter of risk and concern for the country's national stability. The development comes just days after US President Donald Trump announced a strategic Bitcoin and altcoin reserve for the purpose of long-term holding. As per the BOK, the inclusion of any crypto asset in the reserved assets category must be approached with cautious and proper research.
As of now, South Korea has not even reviewed the possible addition of Bitcoin in its foreign exchange reserves, a report by Korea Herald said Sunday. Bitcoin is the most expensive cryptocurrency, which at its highest has breached the $108,000 price mark. Presently, the asset is trading at $83,687 (roughly Rs. 72.6 lakh) on international exchanges.
“In the case of cryptocurrency market instability, the transaction costs to cash out Bitcoins could rise drastically,” the report quoted the BoK as saying.
Elaborating on its Bitcoin-related concerns, the BOK noted that the cryptocurrency failed to meet IMF's standards to be classified as a reserved asset. The IMF guidelines suggest that reserved assets need to maintain their liquidity, market value, and credit rating consistently, which cryptocurrencies cannot promise for now. The crypto sector, currently valued at $2.74 trillion (roughly Rs. 2,38,04,993 crore), is strongly impacted by micro and macro-economic factors.
Considering these factors, the BoK said it had not even begun to review the possibility of having Bitcoin as a reserved asset alongside gold and fiat currencies, among other securities. For now, South Korea is focussed on defining crypto guidelines for corporate participation. The country's Financial Services Commission (FSC) recently announced that these guidelines would be finalised by April this year.
South Korea has joined Switzerland in dismissing the idea of integrating Bitcoin with their respective national treasuries.
Earlier this month, the Swiss National Bank (SNB) had also rejected the idea of adding Bitcoin to Switzerland's reserved assets. After a public consultation, the SNB was proposed to consider holding a portion of national assets in the form of Bitcoin. Responding to the query, SNB's Martin Schlegel said cryptocurrencies were extremely volatile and unsecure in nature.
In the US, meanwhile, President Trump has referred to Bitcoin as ‘digital gold'. He has ordered federal agencies to accumulate all of their Bitcoin and altcoin holdings into two separate reserves. White House Crypto Czar, David Sacks, estimates that the US government presently holds around 200,000 Bitcoin tokens worth around $17.6 billion (roughly Rs. 1,53,161 crore). Given the volatility of crypto assets, Trump said that taxpayers' money will not be used to purchase fresh BTC and altcoin tokens for the reserve – but tokens confiscated during investigations will be added to these reserves.
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