BOK Warns Stronger Crypto-Stock Linkage Could Raise Financial Stability Risks

The Bank of Korea warned that growing linkages between the cryptocurrency market and equities could increase financial stability risks if institutional participation expands.

In its Financial Stability Report for the first half of 2026, released on June 24, the central bank reviewed structural changes in the crypto market and the drivers of price swings. It said the market's influence on traditional financial markets is growing.

According to the report, Bitcoin was previously driven mainly by idiosyncratic factors such as global liquidity and halving cycles. More recently, new variables have become more influential, including leverage in the futures market, spot exchange-traded funds and a growing number of companies holding crypto assets. The correlation between Bitcoin and global money-supply growth was more pronounced during market downturns. Since 2015, the correlation coefficient between Bitcoin and global money-supply growth was 0.33, but it rose to 0.62 during price declines, similar to the Nasdaq's 0.59.

The BOK also pointed to rising leverage in the futures market as a factor increasing price volatility. When highly leveraged positions accumulate, a price drop can trigger a chain of forced liquidations and set off a vicious cycle of further declines.

Companies with large crypto holdings were also identified as a new risk factor. The report said Strategy held about 845,000 Bitcoin as of June 9 and that demand is becoming increasingly concentrated in digital-asset treasury companies. It added that if falling prices push a company's market value below the value of its crypto holdings, fundraising could become more difficult and pressure to sell those assets could increase.

The co-movement between crypto assets and equities is also strengthening. The BOK said the relationship between the two markets increased sharply during the Covid-19 pandemic and the global monetary-tightening cycle, and has remained elevated since the launch of US spot Bitcoin ETFs in 2024.

For now, the impact on South Korea's financial markets remains limited. Domestic trading in spot and futures crypto ETFs is not allowed, and corporate investment in crypto assets remains restricted. Still, the BOK said future rule changes that broaden participation by institutions and companies could allow crypto price swings to affect stock-market supply and demand and foreign-exchange market flows.