The Bank of Korea has asked banks and brokerages to detail their exposure to cryptocurrency-related risks, including how they would be affected by a major exchange hack, a sharp market downturn, or heavy losses at another financial institution.

According to The Herald Business and Yonhap, citing financial industry sources, 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. That makes the responses the central bank's first consolidated baseline of how far the traditional financial sector has moved into crypto.

The questionnaire covers each institution's crypto-related staffing and budgets, business activities and motivations for entering the market, as well as amounts invested in domestic and overseas crypto companies.

One scenario asks how firms would be affected if South Korea's largest cryptocurrency exchange by market share temporarily suspended operations after a major hack or similar incident. Other questions address a steep fall in cryptocurrency prices followed by a prolonged trading slump, and the potential fallout if another financial institution incurred heavy losses from a crypto-related event. Together, the scenarios span three distinct channels of contagion: a single dominant venue failing, a market-wide price shock, and losses spreading from one institution to another.

The survey was launched before last week's $6.3 billion Binance hack, but the incident underscores the type of risk the central bank is examining. US authorities have attributed the attack to North Korean hackers, whose cyber operations have repeatedly targeted cryptocurrency platforms in recent years. Responses are reportedly due on Wednesday.

Stablecoin Testing Continues Amid Legislative Delays

The review comes as South Korean financial firms continue to test 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.

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. How that disagreement is resolved — and which institutions it would allow to issue — remains the key open question for the firms now testing stablecoin services.

"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.

Regulators have also intensified cybersecurity scrutiny. In October, the Financial Services Commission proposed tougher security requirements after finding deficiencies at 130 of 555 financial companies — nearly a quarter of those examined. The proposals include more frequent vulnerability assessments and greater executive accountability, following security incidents involving 16 companies, including crypto exchanges. Read together, the survey and the security review show regulators weighing South Korea's institutional crypto involvement from two angles: financial stability and cybersecurity.