Bank of Korea Weighs How Its Banks Would Weather a Crypto Exchange Hack

The Bank of Korea has asked 31 South Korean financial firms how they would be affected if the crypto exchange with the No. 1 market share in the country had to halt operations temporarily after a major hack, in what The Herald Business describes as the central bank’s first look at how lenders and brokers are moving into crypto.

The BOK sent the request on Oct. 23 to 18 banks, among them KB Kookmin, Shinhan, Hana, Woori and NH NongHyup, and to 13 securities firms, Yonhap reported, citing the central bank and the crypto industry. The firms have until Nov. 4 to respond, according to Yonhap. The BOK has not published anything about the survey. The Herald Business reported that the BOK had never run a survey like it before.

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According to both Korean outlets, one question asks what would happen to financial firms if the exchange holding the No. 1 domestic market share went offline temporarily because of a large-scale hack or a similar incident. Neither report named the exchange. Two other scenarios cover a sharp fall in bitcoin and other crypto prices followed by a prolonged slump in trading, and heavy crypto-related losses at a different financial institution.

The questionnaire also asks each firm about its crypto organization and budget, how far it has gone into the market and what it plans next, what is pushing it in, how it rates and manages the risks, and how much it has put into crypto companies in Korea and overseas.

The central bank intends to use the answers as internal reference material, the reports said. “Financial institutions are making their own preparations even as virtual asset legislation is moving more slowly than the market expected,” a BOK official told The Herald Business. A second official told the outlet that the business reports banks and brokerages give the Financial Supervisory Service fall short on crypto, so the BOK is gathering basic data from each firm itself. Speaking to Yonhap in Korean, a BOK official said the outlook for crypto market growth still holds and firms are interested in it for new business and customers, so the bank wants to check for any concerns in advance.

The survey went out a week before Binance put its hot-wallet losses at about $6.3 billion, a theft the FBI has attributed to North Korea’s TraderTraitor. At home, Bithumb reportedly confirmed on Oct. 28 that an intruder took personal data from an internal staff app. On Oct. 14, the Financial Services Commission said 130 of 555 financial firms had reported gaps on a 12-item security checklist, and that breaches had been confirmed at 16 firms, two of them crypto businesses.

The questions treat an outage at Korea’s No. 1 exchange by market share as a possible source of losses for banks and brokerages themselves, at a time when, by the BOK’s own account, those firms are preparing crypto businesses before the law is settled. The survey also follows the BOK’s June Financial Stability Report, which found crypto and traditional markets growing more closely linked, and moves that market-wide analysis down to individual firms.

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