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Bank of Korea probes financial firms’ exposure to crypto risks
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The Bank of Korea has begun surveying 31 financial institutions about their exposure to cryptocurrency-related risks, marking its first reported review of banks’ and brokerages’ participation in the virtual asset market. The central bank started questioning 18 banks and 13 brokerages on Oct. 23, according to financial industry sources cited by The Herald Business and Yonhap. Responses are due on Wednesday. The review is designed to assess how crypto market shocks could spill into traditional finance.
The survey asks each institution about crypto-related staffing and budgets, business activities, reasons for entering the market, and amounts invested in domestic and overseas crypto companies. It also presents stress scenarios. One asks how firms would be affected if South Korea’s largest crypto exchange by market share temporarily suspended operations after a major hack or similar incident. Another examines a steep fall in cryptocurrency prices followed by a sustained trading slump.
A third scenario asks about potential fallout if another financial institution suffered heavy losses from a crypto-related incident. The survey began before last week’s $6.3 billion Binance hack, but the attack underscores the kind of risk the central bank is examining. US authorities have attributed the Binance attack to North Korean hackers. The incident has drawn fresh attention to cybersecurity and operational resilience in digital asset markets.
The Bank of Korea’s review comes as South Korean financial firms continue testing stablecoin services despite slow legislative 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 central bank has pushed for bank-led stablecoin issuance. However, 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. The comment points to a widening gap between commercial innovation and regulatory clarity. Banks and brokerages are testing crypto-linked services while policymakers debate the rules that would govern them. The central bank’s survey adds a supervisory lens to that activity.
Regulators have also stepped up cybersecurity scrutiny. In October, the Financial Services Commission proposed tougher security requirements after finding deficiencies at 130 of 555 financial companies. The proposals include more frequent vulnerability assessments and greater executive accountability. They follow security incidents involving 16 companies, including crypto exchanges.
The survey’s findings could shape how the Bank of Korea and other regulators treat financial firms’ crypto exposure. With responses due this week, the central bank may use the data to identify concentration risks and operational vulnerabilities. The review also signals that crypto risk is no longer confined to exchanges. For South Korean banks and brokerages, the challenge is to prepare for shocks while stablecoin and digital asset rules remain unresolved.
