Bank of Korea probes financial firms’ exposure to crypto risks
The Bank of Korea has launched its first survey of banks and brokerages on cryptocurrency-related risks, asking how they would be affected by major exchange hacks or market crashes.
The central bank began surveying 18 banks and 13 brokerages on Oct. 23 as part of its first reported review of financial institutions' participation in the virtual asset market. The survey includes questions about each institution's crypto-related staffing and budgets, business activities, and investments 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. Other questions address a steep fall in cryptocurrency prices and potential fallout from heavy losses at another financial institution.
Stablecoin Development
The review comes as South Korean financial firms continue testing stablecoin services. 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.
Financial institutions are making their own preparations even as virtual asset legislation is moving more slowly than the market expected.
Regulatory Response
The Bank of Korea has pushed for bank-led stablecoin issuance, while disagreements over which institutions should be permitted to issue stablecoins have complicated progress on the proposed Digital Asset Basic Act. Responses to the survey are reportedly due on Wednesday.
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, following security incidents involving 16 companies including crypto exchanges.
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