In this paper, we trace how crypto risk from the crypto ecosystem transmits systemic risk to the financial system. First, we measure crypto risk and crypto-driven systemic risk at the financial firm level. Using these metrics, we show that firm-level crypto risk has been rising significantly in recent years, thus leading to greater systemic risk exposure and transmission through two different channels. Specifically, crypto risk affects systemic risk exposure through both blockchain technology and asset class channels but elevates systemic risk transmission mainly via the blockchain technology channel. Notably, financial firms’ management tends to neglect the transmission of risk through the blockchain technology channel. Our findings highlight the integration of two parallel systems and underscore the importance of a global regulatory framework.