Bank of Korea: Institutionalization of virtual assets will strengthen ties with traditional financial markets

Deep Tide TechFlow news, on December 23, according to Yonhap News Agency, the Bank of Korea pointed out in its latest "Financial Stability Report for the Second Half of the Year" that as the global virtual asset market becomes more institutionalized, the connection between virtual assets and traditional financial markets is strengthening. The report analyzes that increased participation by corporations and institutional investors, as well as the launch of exchange-traded funds (ETFs), have established channels linking virtual assets with traditional financial markets worldwide.

The Bank of Korea stated that virtual asset price volatility is mainly transmitted to traditional financial markets through the stock market, and this transmission effect is particularly evident during periods of macroeconomic shocks or shifts in monetary policy. In contrast, due to a strict regulatory environment that limits corporate participation and financial product issuance, the transmission effect index of the domestic virtual asset market in Korea is relatively low. The Bank of Korea recommends that, in the process of advancing the institutionalization of virtual assets, an effective management system should be established to keep the potential risks between traditional financial markets and the virtual asset market within a manageable range.