Bank of Korea quizzes 31 financial firms in first crypto survey on how they’d survive an exchange shutdown

The Bank of Korea has asked 31 banks and securities firms what happens to them if South Korea’s biggest crypto exchange is hacked and shuts down, or if Bitcoin crashes and trading dries up.

The survey, launched Oct 23 and due back Nov 4, is the central bank’s first reported attempt to map how far crypto risk could spread into traditional finance.

Bank of Korea targets banks and securities firms

The institutions included in the investigation represent some of South Korea’s largest financial players. The five major banks are KB Kookmin, Shinhan, Hana, Woori and NH NongHyup, alongside 13 securities companies and other participating lenders.

The central bank wants to establish how deeply these companies are involved in the digital asset economy. Its questions cover the departments responsible for cryptocurrency operations, employee numbers, allocated budgets and existing or proposed business initiatives.

Institutions must also disclose their motivations for entering the sector and provide information about investments in cryptocurrency-related companies operating in South Korea and overseas.

According to The Korea Herald, the authorities are particularly interested in identifying financial exposure that might not be adequately reflected in existing regulatory reporting systems.

A Bank of Korea representative explained the motivation behind the exercise, saying:

“The purpose is to take stock of the current situation and get an early read on what lies ahead.”

The official added that financial institutions were preparing for opportunities in the virtual asset industry even though legislative progress had been slower than anticipated.

The Crypto review is intended to provide the central bank with internal reference material rather than immediately introduce new restrictions on participating institutions.

Its findings could nevertheless help regulators understand whether existing supervisory arrangements are sufficient as conventional financial companies increase their digital asset exposure.

Exchange hacks and market downturns raise concerns

One of the most significant aspects of the investigation involves hypothetical scenarios that could expose weaknesses in the relationship between cryptocurrency platforms and traditional financial institutions.

The central bank reportedly asked participants to evaluate the consequences of South Korea’s largest cryptocurrency exchange by domestic market share temporarily suspending operations following a major hacking incident.

Another scenario examines the possibility of Bitcoin and other digital assets experiencing substantial price declines, followed by an extended period of reduced trading activity.

Financial companies must also consider how losses suffered by another institution because of cryptocurrency-related incidents could affect their own operations.

The timing has become particularly significant following Binance’s October 29 security incident.

The exchange disclosed that compromised hot wallets resulted in an estimated $6.3 billion impact involving digital assets. Binance subsequently said it was working with law enforcement agencies, blockchain intelligence firms and other industry participants to trace and freeze affected funds.

However, an important distinction remains: the Bank of Korea initiated its questionnaire on October 23, six days before the Binance incident. The investigation was therefore not launched in response to that particular breach.

The separate development has nevertheless reinforced the importance of the risks being examined.

South Korea has also been strengthening cybersecurity oversight across its financial industry. In October, the Financial Services Commission reported that 130 of 555 financial companies assessed had identified areas requiring improvement, including security patches, monitoring systems and access controls.

The latest Crypto review reflects growing concern that vulnerabilities in digital asset infrastructure could have consequences beyond cryptocurrency exchanges, particularly as financial institutions become more interconnected.

Stablecoin expansion puts traditional banks in the spotlight

The investigation comes as South Korean banks and payment companies accelerate efforts to explore blockchain-based financial services.

In September, Kakao Pay and KakaoBank signed a memorandum of understanding with digital asset infrastructure provider Fireblocks. The agreement covers the exploration of digital asset infrastructure, including potential stablecoin distribution frameworks and technical testing.

The announcement did not confirm a commercial stablecoin launch or establish a deployment date.

Another development emerged in October when Gwangju Bank and Toss completed a proof-of-concept test involving stablecoin payments through QR codes.

The trial connected Gwangju Bank’s mobile application, the Toss application and merchant payment terminals. However, it used a virtual merchant environment rather than actual customer information or funds. Both companies indicated that further technical testing would follow.

International payments company MoonPay also announced its entry into South Korea on September 29, revealing partnerships with KakaoBank, Woori Bank and KB Financial Group.

Its plans include developing infrastructure for stablecoin payments, cross-border transactions and digital asset services.

Despite the growing interest, disagreements over whether banks or nonbank companies should be permitted to issue won-denominated stablecoins continue to complicate regulatory discussions.

These developments explain why the Bank of Korea wants a clearer understanding of financial institutions’ activities before the market expands further.

The Crypto review could help identify potential weaknesses in the relationship between traditional banking operations and emerging blockchain-based services, particularly where institutions have financial exposure to digital asset companies.

Bank of Korea warns of growing financial market connections

The latest investigation also builds on concerns previously outlined in the central bank’s financial stability research.

In its June 2026 Financial Stability Report, the Bank of Korea highlighted increasing connections between cryptocurrency markets and traditional financial assets.

The report examined how Bitcoin’s relationship with stock markets strengthened during periods of financial uncertainty, including the COVID-19 pandemic and the global interest rate increases of 2022. It also identified elevated correlations following the introduction of US spot Bitcoin exchange-traded funds in 2024.

The central bank has separately warned about the financial stability implications of won-denominated stablecoins.

Its November 2025 report identified possible problems involving collateral shortages, short-term interest rate volatility and the transmission of financial stress between cryptocurrency markets and traditional financial systems.

These concerns are particularly relevant if stablecoin issuers experience difficulties meeting redemption demands or managing their reserve assets.

The institution has also acknowledged gaps in the information currently available about financial companies’ digital asset operations.

Consequently, the new Crypto review represents an effort to obtain more detailed information about activities that may not be fully captured by conventional financial reporting.

The 31 participating institutions are expected to submit their completed questionnaires by November 4.

While the exercise does not immediately introduce additional regulatory requirements, its findings could influence how South Korea approaches digital asset supervision as banks, securities firms and payment providers deepen their involvement in the sector.

For the Bank of Korea, understanding these connections before a major market disruption occurs may prove essential to protecting the country’s wider financial system.