Bank of Korea surveys lenders, brokerages on crypto risk exposure

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Bank of Korea crypto risk survey

Highlights

The Bank of Korea surveyed 18 banks and 13 brokerages from Oct. 23, examining crypto staff, budgets, business lines, and investment exposure.
Scenario testing in the survey assesses potential impacts of major crypto exchange shutdowns and sharp crypto price declines on domestic financial institutions.
Regulators propose stricter cybersecurity rules after deficiencies at 130 of 555 firms, while stablecoin initiatives advance amid delays in finalizing the Digital Asset Basic Act.

Risk review covers market shocks and operational exposure

As reported by Cointelegraph, citing The Herald Business and Yonhap, the Bank of Korea begins surveying 18 banks and 13 brokerages on Oct. 23, in what The Herald Business and Yonhap describe as its first reported review of financial institutions' participation in the virtual asset market.

The questionnaire asks about crypto-related staffing, budgets, business lines and the reasons institutions entered the sector. It also seeks details on investment amounts placed into domestic and overseas crypto companies.

One scenario tests how firms would be affected if South Korea's largest crypto exchange by market share temporarily suspends operations after a major hack or similar incident. Other questions examine the impact of a sharp fall in cryptocurrency prices followed by a prolonged trading downturn, as well as the possible fallout if another financial institution suffers heavy crypto-related losses.

The survey starts before last week's $6.3 billion Binance hack, but the incident underscores the type of risk the central bank is reviewing. U.S. authorities attribute that attack to North Korean hackers, and responses to the Bank of Korea survey are reportedly due on Wednesday.

Stablecoin plans advance as regulators tighten scrutiny

South Korean financial firms continue testing stablecoin-related services while policy discussions over the sector move more slowly. KB Financial Group completes a won-denominated stablecoin pilot in May, while Kakao Pay and KakaoBank partner with Fireblocks in September to explore digital asset infrastructure.

The Bank of Korea is pushing for bank-led stablecoin issuance, but disagreements over which institutions should be allowed to issue stablecoins are complicating progress on the proposed Digital Asset Basic Act. A Bank of Korea official tells The Korea Herald that financial institutions are making their own preparations even as virtual asset legislation is moving more slowly than the market expected.

Regulators are also intensifying cybersecurity oversight. In October, the Financial Services Commission proposes tougher security requirements after finding deficiencies at 130 of 555 financial companies, including measures such as more frequent vulnerability assessments and stronger executive accountability after security incidents involving 16 companies, including crypto exchanges.

Our earlier coverage on the Bank of England’s push for “bare metal” recovery planning highlighted how banks are being urged to build independent fallback systems to keep critical services running if core technology is compromised. The piece also noted that advances in AI are increasing the scale and complexity of cyber attacks, prompting supervisors to demand deeper end-to-end resilience and clearer recovery capabilities across the financial system.

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