Bank of Korea Probes Banks and Brokerages Over Crypto Market Contagion Risks

The Bank of Korea has initiated its first formal review of domestic financial institutions' exposure to cryptocurrency markets, surveying 18 banks and 13 brokerages about their operational risks and capital exposure ¹. The inquiry, launched on Oct. 23, evaluates how the domestic financial sector would navigate systemic shocks, including a prolonged market downturn or the sudden suspension of operations at South Korea's largest cryptocurrency exchange following a severe cyberattack ¹.

According to central bank details reported by local media, respondents must disclose crypto-related headcounts, corporate budgets, strategic motivations for entering virtual asset markets, and direct capital allocations to domestic and foreign digital asset firms ¹. The survey also models spillover effects if a peer institution suffers catastrophic losses tied to a crypto incident ¹. Responses from the 31 surveyed institutions are due on Wednesday ¹.

Stablecoins and Tightening Cybersecurity Scrutiny

The central bank's review coincides with accelerating private-sector digital asset pilots despite domestic legislative bottlenecks ¹. KB Financial Group completed a won-denominated stablecoin pilot in May, while KakaoBank and Kakao Pay teamed up with institutional custodian Fireblocks in September to build out digital asset rails ¹. Although the Bank of Korea has publicly advocated for bank-led stablecoin models, statutory progress on the broader Digital Asset Basic Act remains stalled over jurisdictional debates regarding issuer eligibility ¹. A central bank official noted that financial firms are advancing unilateral preparations despite the slower-than-anticipated legislative pace ¹.

The operational risk assessment also follows wider supervisory pressure on technological vulnerabilities ¹. In October, the Financial Services Commission put forward stricter cybersecurity mandates after uncovering security deficiencies across 130 of 555 audited financial companies ¹. Those regulatory measures, spurred by incidents at 16 firms including digital asset exchanges, introduce recurring vulnerability reviews and increased executive accountability ¹. The developments come as cross-border enforcement continues to reshape the regional ecosystem; earlier initiatives saw South Korea block 27 unregistered crypto platforms following regulatory reviews, while regional transaction volumes have expanded steadily, as South Korea leads East Asia's crypto economy ¹.