Bank of Korea Surveys 31 Financial Organization on Cryptocurrency Risks

The Bank of Korea has initiated a survey of 31 financial organizations regarding risks associated with cryptocurrencies. According to The Herald Business and Yonhap, citing industry sources, 18 banks and 13 brokerage firms have been surveyed since October 23 – this is the first known review of financial organizations' participation in the virtual asset market.

The survey inquires about personnel and budgets related to cryptocurrencies, areas of activity, reasons for entering the market, and the amounts invested in local and foreign crypto companies. One scenario: how firms would react if South Korea's largest crypto exchange by market share temporarily suspends operations following a major hack or similar incident. Other questions concern a sharp drop in prices and a prolonged trading slump, as well as the consequences if another financial organization incurs significant losses due to a crypto incident.

The survey began before the $6.3 billion Binance hack, which was reported last week, but this case illustrates the risks the regulator is examining. Responses are expected on Wednesday. U.S. authorities attributed the attack to North Korean hackers.

Meanwhile, South Korean financial firms are testing stablecoin services. KB Financial Group completed a pilot with a won-based stablecoin in May, and Kakao Pay and KakaoBank partnered with Fireblocks in September to explore digital asset infrastructure. The Bank of Korea has advocated for banks to issue stablecoins, but disagreements over which organizations can issue them have complicated the advancement of the basic digital assets bill. “Financial institutions are preparing themselves, although virtual asset legislation is moving slower than the market expected,” a Bank of Korea representative told The Korea Herald.

Regulators have tightened cybersecurity controls: in October, the Financial Services Commission proposed stricter requirements following an inspection that revealed deficiencies in 130 out of 555 financial companies. Proposals include more frequent vulnerability assessments and greater accountability for executives; incidents in 16 companies, including crypto exchanges, prompted this move.