Bank of Korea’s crypto risk survey arrives with a $6.3B hack hanging over the market

The Bank of Korea has begun surveying 18 banks and 13 brokerages about their exposure to cryptocurrency risks, including how they would respond to a major exchange hack, a market crash or heavy losses at another financial institution. The survey started on Oct. 23 and is the central bank’s first reported review of financial institutions’ participation in the virtual asset market, according to The Herald Business and Yonhap, citing financial industry sources.

Questions cover crypto-related staffing and budgets, business activities and reasons for entering the market, and amounts invested in domestic and overseas crypto companies. One scenario examines the impact if South Korea’s largest crypto exchange by market share temporarily suspended operations after a major hack or similar incident. Others address a steep fall in cryptocurrency prices followed by a sustained trading slump and the potential fallout if another financial institution suffered heavy losses from a crypto-related incident. Responses are reportedly due on Wednesday.

The review began before last week’s $6.3 billion Binance hack, which US authorities have attributed to North Korean hackers. The incident has heightened focus on the type of exchange-security risks being examined by the Bank of Korea.

South Korean financial firms have continued testing stablecoin services while regulatory negotiations remain in progress. KB Financial Group completed a won-denominated stablecoin pilot in May, while Kakao Pay and KakaoBank partnered with Fireblocks in September to explore digital asset infrastructure. The Bank of Korea has pushed for bank-led stablecoin issuance, but disagreements over which institutions should be permitted to issue stablecoins have complicated progress on the proposed Digital Asset Basic Act.

“Financial institutions are making their own preparations even as virtual asset legislation is moving more slowly than the market expected,” a Bank of Korea official told The Korea Herald. Regulators have also tightened cybersecurity scrutiny: in October, the Financial Services Commission proposed tougher security requirements after finding deficiencies at 130 of 555 financial companies, including more frequent vulnerability assessments and greater executive accountability following incidents involving 16 companies, including crypto exchanges.