As discussions around Bitcoin's long-term security and role in national financial systems continue to evolve, two key debates have emerged. In South Korea, the Bank of Korea has reaffirmed its cautious stance on including Bitcoin in its foreign exchange reserves, citing concerns over volatility and liquidity. Meanwhile, Bitcoin security expert Jameson Lopp has warned against the potential use of quantum computing to recover lost BTC, arguing that such a move could undermine the network’s core principles of immutability and decentralization.
Bank of Korea Maintains Skepticism on Bitcoin Reserves Despite Global Shifts
The Bank of Korea (BOK) has reaffirmed its cautious stance regarding the potential inclusion of Bitcoin (BTC) in its foreign exchange reserves, citing concerns over high volatility and liquidity risks. The statement, made in response to a March 16 written inquiry from Representative Cha Gyu-geun of the National Assembly’s Planning and Finance Committee, shows the country’s reluctance to follow in the footsteps of other nations exploring crypto-backed reserves.
Despite Bitcoin's increasing institutional adoption and global discussions around its role in national financial strategies, the South Korean central bank has yet to formally explore or deliberate on adding BTC to its foreign reserves. According to the Korea Herald, the BOK emphasized the need for a "cautious approach", pointing out Bitcoin’s price instability and its potential impact on transaction costs during periods of market turbulence.
This stance is consistent with South Korea’s historically measured approach to cryptocurrency regulation, despite the country’s status as one of the most active crypto markets globally.
Bitcoin’s price action over the past month has likely reinforced the BOK’s skepticism. Over the past 30 days, BTC has fluctuated significantly, reaching a high of $98,000 before dipping to $76,000, ultimately stabilizing around $83,000—marking a 15% decline since Feb. 16, according to CoinGecko.
These price movements highlight the extreme volatility that has long been a concern for regulators and policymakers, particularly when considering Bitcoin as a reserve asset. Unlike traditional fiat reserves such as the US dollar (USD), euro (EUR), or Japanese yen (JPY), Bitcoin does not yet possess the same level of stability or universal acceptance for central banking functions.
The Bank of Korea’s reluctance to embrace Bitcoin stands in contrast to a growing trend among global policymakers who are increasingly considering digital assets as part of their financial reserves.
Earlier this month, US President Donald Trump signed an executive order directing federal agencies to establish a strategic Bitcoin reserve and a broader digital asset stockpile, a move that sent shockwaves through both traditional financial institutions and the crypto market. The initiative signals a growing recognition of Bitcoin’s potential role in global finance, particularly as a hedge against fiat currency devaluation.
In response to Trump’s decision, prominent South Korean crypto industry leaders and some Democratic Party members have called on the government to take proactive steps in integrating Bitcoin into the country’s reserves. At a seminar on March 6, these advocates pushed for both BTC integration and the development of a won-backed stablecoin, which they argue would enhance South Korea’s financial sovereignty in an increasingly digital global economy.
Despite the ongoing debate, the Bank of Korea remains firm in its position that foreign exchange reserves must meet strict liquidity and credit rating criteria, which, in its view, Bitcoin does not currently satisfy.
This perspective aligns with traditional reserve management policies, which prioritize assets that can be quickly liquidated in times of economic uncertainty. Bitcoin, due to its decentralized nature and relatively low daily trading volume compared to fiat markets, does not yet meet these criteria.
As the global financial landscape evolves, some experts argue that stablecoins—cryptocurrencies pegged to fiat currencies—could emerge as a more viable option for foreign reserves than Bitcoin itself.
Professor Kang Tae-soo from the KAIST Graduate School of Finance believes that the US will likely leverage stablecoins rather than BTC to maintain the dollar’s global dominance. He further emphasized that the International Monetary Fund (IMF) may eventually recognize stablecoins as part of official foreign exchange reserves, a development that could significantly impact how central banks approach digital assets.
If the IMF were to take such a step, it could pave the way for South Korea and other major economies to reconsider their approach to digital assets in a way that aligns with traditional financial safeguards.
South Korea’s Regulatory Landscape Remains Uncertain
While the Bank of Korea remains cautious, South Korea’s broader regulatory landscape is shifting. Earlier this month, the country’s financial watchdogs reviewed Japan’s approach to digital asset regulation, including the Japanese Financial Services Agency’s move toward potential crypto exchange-traded funds (ETFs).
South Korea has historically taken a conservative stance on crypto-related financial products, banning crypto ETFs and certain derivatives in 2021. However, with Japan reconsidering its stance, there is speculation that South Korea may follow suit, particularly as other nations—including the United States and Canada—move forward with regulated crypto investment products.
Despite mounting global momentum for Bitcoin reserves and crypto integration, South Korea remains on the sidelines. While some policymakers and industry leaders push for a more progressive approach, the Bank of Korea’s strict requirements for liquidity and stability continue to pose a barrier to Bitcoin’s inclusion in national reserves.
However, the financial landscape is changing rapidly. If major institutions such as the IMF and global central banks adopt new policies regarding crypto reserves or stablecoins, South Korea may eventually reconsider its stance.
For now, Bitcoin remains off the table, but the debate is far from over. With increasing pressure from both domestic stakeholders and international trends, the coming months may see renewed discussions on how South Korea can position itself in the evolving digital financial ecosystem.
Bitcoin vs. Quantum Computing: Jameson Lopp Warns Against Quantum Recovery of Lost BTC
In other BTC news, the debate surrounding the impact of quantum computing on Bitcoin security has intensified, with Jameson Lopp, Chief Security Officer at Casa, taking a firm stance against allowing quantum computers to recover lost BTC. Instead, Lopp believes that burning these lost coins is the best way to maintain Bitcoin’s fundamental properties, including censorship resistance, transaction immutability, and protocol conservatism.
His March 16 article has reignited discussions on whether quantum computing poses an existential threat to Bitcoin’s cryptographic foundation or if concerns about its impact are overblown.
Bitcoin’s protocol is designed to be decentralized, immutable, and resistant to censorship. Once a transaction is confirmed and added to the blockchain, it is final and irreversible. This immutability is one of the main reasons Bitcoin has been hailed as "hard money", immune to manipulation by governments or financial institutions.
However, quantum computing introduces the theoretical possibility of breaking Bitcoin’s cryptographic encryption and allowing powerful actors to recover lost coins. Lopp argues that this scenario would introduce a dangerous form of wealth redistribution, favoring those with access to quantum technology at the expense of those who lost their Bitcoin due to forgotten passwords or misplaced private keys.
Lopp warns that such a scenario could undermine trust in the system, as people would no longer be certain that their holdings were immune to future technological advancements. This, in turn, could harm Bitcoin’s security, stability, and decentralization.
The potential threat of quantum computers breaking modern cryptography has been debated for years. While some experts believe that practical quantum decryption is still decades away, others argue that quantum advancements could arrive much sooner than anticipated.
In October 2024, researchers from Shanghai University claimed that they had developed a quantum algorithm capable of breaking encryption used in military and banking applications. This sparked widespread fears about quantum computing’s impact on Bitcoin and modern cybersecurity.
However, critics—including popular YouTuber Mental Outlaw—pushed back against these claims, asserting that the research had been misinterpreted and that the actual breakthroughs were far more limited.
According to Mental Outlaw:
The quantum computer used in the study only managed to factorize the integer 2,269,753, which is a record for quantum computing but still falls short of classical computers’ capabilities.
The device only managed to break a 22-bit encryption key, while classical computers have already broken encryption keys up to 892 bits.
Modern encryption uses key sizes ranging from 2048 to 4096 bits, meaning quantum computers still have a long way to go before posing a real threat.
These rebuttals suggest that while quantum computing is progressing, it is nowhere near capable of breaking Bitcoin’s encryption or modern security standards.
While Lopp argues that quantum recovery should not be an option, others within the crypto space have been working on quantum-resistant solutions to protect Bitcoin from potential threats in the future.
1. Post-Quantum Cryptography
Cryptographers and Bitcoin developers have been exploring post-quantum cryptographic algorithms to upgrade Bitcoin’s security before quantum computers become powerful enough to break existing encryption.
Some proposals include lattice-based cryptography and other quantum-resistant signature schemes that could be integrated into Bitcoin through a future soft fork or upgrade.
2. Increasing Key Sizes
Modern encryption key sizes can increase over time, making them more difficult for quantum computers to break. While 2048-bit and 4096-bit keys are currently used, there are proposals to move toward 8192-bit or even larger keys as a preemptive measure.
3. Multi-Signature (Multisig) & Second-Layer Security
Bitcoin users can adopt multi-signature wallets and second-layer security solutions to make their assets more resilient against future threats. Some hardware wallets are also experimenting with quantum-resistant security measures.
4. Transitioning to a Quantum-Secure Blockchain
If quantum computers ever pose a serious threat to Bitcoin’s cryptography, the network could undergo a hard fork or migration to a more secure blockchain that incorporates quantum-resistant encryption techniques.
The Debate: To Burn or Not to Burn?
Lopp’s argument about burning lost BTC instead of recovering it with quantum computers highlights a broader philosophical debate within the Bitcoin community.
On one side, purists believe that Bitcoin should remain immutable, and any recovery method—even through advanced technology—would violate its core principles. They argue that burning lost coins is the best way to protect Bitcoin’s long-term stability.
On the other hand, some believe that if quantum technology becomes a reality, Bitcoin may need to adapt rather than resist change. Allowing for controlled, regulated recovery of lost BTC could prevent early adopters from losing their holdings while still preserving the integrity of the network.
