- The Bank of Korea is surveying 18 banks and 13 brokerages about cryptocurrency-related risks.
- The survey includes scenarios involving a major exchange hack, a steep market crash, and heavy losses at another financial institution.
- South Korean financial firms continue testing stablecoin services while digital asset legislation remains delayed.
- Regulators proposed tougher Cybersecurity rules after weaknesses at 130 of 555 financial companies.
The Bank of Korea has asked 18 banks and 13 brokerages to weigh in on how cryptocurrency-related risks could affect their operations, according to The Herald Business and Yonhap. The survey, launched Oct. 23, marks the central bank’s first reported review of financial institutions’ participation in the virtual asset market.
The questions cover each institution’s crypto-related staffing, budgets, business activities and reasons for entering the market, along with amounts invested in domestic and overseas crypto companies. One scenario asks how financial firms would be affected if South Korea‘s largest crypto exchange by market share temporarily suspended operations following a major hack or similar incident.
Another scenario examines a steep fall in cryptocurrency prices followed by a sustained trading slump. The survey also probes 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, which U.S. authorities have attributed to North Korean Hackers. The incident highlights the type of risk the central bank is examining, and responses are reportedly due Wednesday.
Meanwhile, South Korean financial firms continue testing stablecoin services even as regulation lags. 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.
However, 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.
Consequently, regulators have 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.
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