The Bank of Korea began surveying 18 banks and 13 brokerages on 23 October about their involvement in the crypto-asset market, according to Korean media cited by Cointelegraph. It asks about staffing, budgets, business activities and investments in crypto companies. The scenarios include a temporary shutdown of the largest domestic exchange after a hack, a prolonged price slump and heavy losses at another institution. Responses are due on Wednesday.

What it means: The central bank is not only looking at how much crypto banks hold, but at how a market shock would spread to the rest of the financial system, for example through exchange deposits, partnerships or investments in industry companies. The survey began before the Binance theft, but that incident shows exactly the kind of risk it wants to measure. South Korea is also debating who should issue won stablecoins, with the central bank pushing for banks to take the lead. In Europe, the ECB and the European Banking Authority already apply a specific capital treatment to bank exposures to crypto-assets, and DORA requires scenarios for failures of critical third-party providers. For Greek banks and payment institutions considering partnerships with crypto providers, the Korean exercise is a useful template: what would it cost if the partner closed for weeks, how many customers would be affected and how quickly could flows be stopped. Supervisors are likely to ask similar questions in Europe before long.

Read the original on Cointelegraph

Related service: Consulting

Related stories