[Editorial] Binance heist should be South Korea’s wake-up call about crypto security

The Bank of Korea has initiated a survey of 31 financial institutions, including 18 banks and 13 brokerages, to assess their exposure to risks associated with cryptocurrencies. The central bank aims to understand how a major exchange shutdown, a prolonged downturn in the crypto market, or significant losses at another financial institution could impact their operations.

The survey, which commenced on October 23, covers various aspects of each institution's involvement in the virtual asset market, such as staffing and budgets dedicated to crypto-related activities, business operations, and reasons for entering the market. Financial firms would be questioned about the potential consequences of a large-scale hack at South Korea's leading crypto exchange or severe falls in cryptocurrency prices leading to prolonged trading slumps.

The survey is particularly relevant in light of the recent $6.3 billion Binance hack, attributed to North Korean hackers by US authorities. South Korean financial firms have been actively testing stablecoin services, with KB Financial Group piloting a won-denominated stablecoin in May and Kakao Pay and KakaoBank partnering with Fireblocks in September to explore digital asset infrastructure.

Despite the central bank's efforts to encourage bank-led stablecoin issuance, progress on the proposed Digital Asset Basic Act has been hindered by disagreements over which institutions should be permitted to issue stablecoins. Financial regulators have also heightened cybersecurity scrutiny, proposing stricter security requirements following security incidents involving 16 companies, including crypto exchanges.