South Korea's central bank has issued a warning about potential cross-market contagion risks as the integration between cryptocurrency and traditional finance deepens. In its latest report, the bank emphasized the need for enhanced oversight of liquidity and crypto markets, particularly as global institutionalization of virtual assets gains momentum. The report also stressed the importance of incorporating Countering the Financing of Terrorism measures into regulatory frameworks. Despite these concerns, the report noted that retail investors continue to dominate South Korea's domestic crypto market, which currently limits the transmission effects compared to international markets. This dynamic suggests that while the integration poses risks, the immediate impact on South Korea's financial system may be mitigated by the current market structure.