Will Taiwan include Bitcoin in its strategic reserve assets? The central bank provides the final answer......

Taiwan’s Central Bank responded to legislator Ge Rujun’s inquiry on “whether Bitcoin should be used as a central bank reserve asset” by officially submitting a written assessment document. The conclusion is clear: Bitcoin is not suitable as a central bank reserve asset. The Taiwan Central Bank pointed out four core risks associated with Bitcoin: extreme price volatility, liquidity risk, cybersecurity custodial risk, and immature regulatory framework, which do not meet the three main principles of reserve assets—“safety, liquidity, and yield.”

The Four Core Risks Lead Taiwan’s Central Bank to Say No

(Source: Taiwan Central Bank)

In the assessment document, Taiwan’s Central Bank details the four core risks of holding Bitcoin as a reserve asset, which directly violate the fundamental requirements for reserves. First is the issue of extreme price fluctuations; Bitcoin’s volatility far exceeds that of fiat currencies and gold. In times of crisis, selling off Bitcoin could contradict the stability nature of reserve assets. The core function of a central bank reserve is to provide a buffer during financial crises or foreign exchange shortages in Taiwan, but Bitcoin’s price can plummet over 30% within days, which makes it impossible to meet stability requirements.

The Four Core Risks Named by Taiwan’s Central Bank

Extreme Price Volatility: Volatility far exceeds that of fiat currencies and gold. During crises, selling may violate the stability nature of reserves, failing to provide reliable value protection.

Liquidity Risk: Trading volume is lower than traditional assets and concentrated on a few platforms. If these platforms go bankrupt or face regulatory issues, liquidity could vanish instantly, making emergency liquidation difficult.

Cybersecurity and Custodial Risks: Facing hacking risks, private key management is akin to bearer notes; if lost, almost impossible to recover, and legal remedies are unavailable.

Immature Regulatory Framework: Regulations vary across countries and regions, lacking clear international legal frameworks, which could lead to legal disputes in cross-border handling. As a government agency, Taiwan’s Central Bank requires clear legal basis for all operations, which current regulatory vacuum cannot provide.

The second liquidity risk is equally critical. Although Bitcoin trading volume appears substantial, it is significantly less than traditional markets and is highly concentrated on a few trading platforms. Should these platforms go bankrupt or face regulatory issues, liquidity could disappear in an instant. Taiwan’s Central Bank needs assets that can be quickly liquidated at any time, which Bitcoin cannot guarantee.

Cybersecurity and custodial risks are the third major concern. Managing Bitcoin private keys is similar to bearer notes; if lost, recovery is nearly impossible, and legal recourse is unavailable. The central bank manages strategic assets, and any cybersecurity breach could cause irreparable losses. In contrast, traditional foreign exchange reserves are stored in trusted financial institutions, protected by comprehensive legal safeguards and insurance mechanisms.

The fourth point is the immature regulatory framework. Regulations concerning cryptocurrencies differ across nations and regions, lacking clear international legal standards, which could cause legal disputes in cross-border transactions. As a government institution, Taiwan’s Central Bank requires a clear legal basis for all operations, which the current regulatory vacuum cannot fulfill.

Global Central Banks’ Attitudes: 93% Have No Intention to Hold Digital Assets

Taiwan’s cautious stance is not an exception but reflects the mainstream attitude among global central banks. According to OMFIF’s “Global Public Investor Report 2025,” up to 93% of surveyed central banks have no intention to hold digital assets, with only a few considering it. This overwhelming majority indicates that, without sufficient international precedents and mature frameworks, most central banks are reluctant to take risks.

Institutions like the European Central Bank, Federal Reserve, and IMF maintain a conservative stance toward holding Bitcoin as reserves. International consensus generally views Bitcoin as lacking intrinsic value and fundamentally different from traditional reserve assets like gold. Gold has thousands of years of value consensus and industrial uses to support it, whereas Bitcoin’s value depends entirely on market confidence, making its foundation too fragile.

It is noteworthy that even the most frequently cited Czech Central Bank example does not actually include Bitcoin in its official reserves. In November, the Czech Central Bank announced an investment of USD 1 million into a digital asset testing portfolio, but this portfolio is completely separate from the international reserves and will not be included in reserves. The Czech Central Bank explicitly stated this is merely for gaining practical experience and establishing processes for private key management and anti-money laundering, not an endorsement of Bitcoin as a reserve asset.

Stablecoins Are the Focus of Taiwan’s Central Bank

Although cautious about Bitcoin, Taiwan’s Central Bank specifically mentioned in its assessment that, given the price stability and low-cost advantages of US dollar stablecoins in cross-border payments, they may play an important future role. The bank will continue to cautiously evaluate their development and impact. This indicates that the central bank does not completely reject digital assets but prioritizes those with actual payment functions and stable prices.

The fundamental difference between stablecoins and Bitcoin lies in their price stabilization mechanisms. Mainstream stablecoins like USDT and USDC are pegged 1:1 to the US dollar and supported by adequate reserves, maintaining extremely low volatility. This makes them more suitable as cross-border payment tools rather than speculative investment assets. Taiwan’s Central Bank Governor has likened stablecoins to “modern wildcat banks,” demonstrating an awareness of the risks while also recognizing their potential roles in the financial system.

Taiwan’s Unique Position: No Need to Take High Risks

Industry expert Yu Che-Ann pointed out that Taiwan’s large foreign exchange reserves and mature financial system are entirely different from economies like El Salvador. Taiwan does not need to use Bitcoin narratives to hedge financial fragility, attract foreign investment, or gamble on national fortunes. Taiwan holds over USD 560 billion in foreign exchange reserves, ranking fourth globally, far exceeding most markets, with a stable financial system and well-established regulation.

Moreover, the U.S. example cited by legislators is also misunderstood. Trump’s executive order deals with asset confiscation, not requiring the central bank to buy Bitcoin; state governments in the U.S. can customize fiscal tools, but this does not mean the Federal Reserve is willing to hold Bitcoin. The Fed has yet to express support for including Bitcoin in reserves, clearly maintaining a conservative stance even in the most developed cryptocurrency environment.