ME News message, December 23 (UTC+8), the Bank of Korea stated in its second half financial stability report published on December 23 that as the global virtual asset market progresses toward institutionalization, the correlation between virtual assets and traditional financial markets is strengthening. The report analyzes that driven by factors such as the expansion of participation by corporate and institutional investors and the launch of spot ETFs, the price volatility of virtual assets is increasingly synchronized with the stock market. Spillover effect index analysis shows that shocks in the virtual asset market can impact traditional financial markets, especially during periods of macroeconomic shocks or shifts in monetary policy. The report believes that due to the prohibition of corporate participation in the market and restrictions on the issuance of financial products in South Korea, the current spillover effects are at a relatively low level, with the market structure still dominated by individual investors. However, the Bank of Korea pointed out that if South Korea advances the institutionalization of virtual assets in the future, the links between virtual assets and traditional financial markets will expand accordingly, forming a transmission path for shocks. Therefore, during the process of institutionalization, it is essential to establish a system that can manage the potential risks brought about by synchronization at a manageable level. (Source: ME)

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