South Korea has no plans to incorporate Bitcoin in its foreign exchange reserves, according to the country’s central bank.

On Mar. 16, local media outlet Yonhap reported that officials from the Bank of Korea ruled out adding Bitcoin (BTC) to its foreign exchange reserves in response to a written inquiry from Representative Cha Gyu-geun of the National Assembly’s Planning and Finance Committee.

The central bank cited Bitcoin’s high volatility as a major concern, warning that “transaction costs to cash out Bitcoins could rise drastically” if the crypto market experiences instability.

Officials also pointed out that Bitcoin does not meet the International Monetary Fund’s criteria for foreign exchange reserves, which require assets to maintain liquidity, market stability, and a credit rating of investment grade or higher.

Discussions around national crypto reserves have gained traction globally, especially following the U.S. government’s decision to establish a Strategic Bitcoin Reserve. Some countries, like Brazil and the Czech Republic, have even expressed openness to the idea.

Yet, the Bank of Korea maintained that a “cautious approach” is necessary, noting that institutions like the European Central Bank, the Swiss National Bank, and Japan’s financial authorities share a similarly skeptical stance.

The bank further clarified that it has neither reviewed nor formally discussed the possibility of incorporating Bitcoin into its reserves.

According to Yonhap, some members of the Korean Democratic Party urged the central bank to explore Bitcoin’s potential role in the country’s financial system in a March 6 policy seminar.

As previously reported by crypto.news, the Financial Services Commission has also taken a similar stance. In November, FSC Chairman Kim Byung-hwan acknowledged calls for a national Bitcoin reserve but dismissed the idea as premature

However, South Korea has been gradually loosening its stance on crypto regulations. The country’s financial watchdog has been working on lifting restrictions on institutional crypto trading and is preparing a second legal framework focused on stablecoin oversight.

Policymakers are also considering allowing crypto exchange-traded funds, which, according to the chairman of the Korea Exchange, could bring fresh opportunities to the country’s financial sector.