Dollar-backed stablecoins can push national currencies lower once global exchanges let investors buy the tokens directly with local fiat, a Bank of Korea study published September 3 found. The paper, authored by International Department economists Jihyun Kim and Sangheum Cho, examined what happened after Binance introduced direct fiat-stablecoin trading pairs across twelve currencies between 2019 and 2025, and it documents a measurable transmission channel from crypto markets into foreign exchange.
The mechanism runs through professional market makers. When a fiat-stablecoin pair goes live on a global venue, market makers act as counterparties to investors buying tokens like USDT and USDC with local currency. After supplying the stablecoins, those market makers hold inventory in the local currency and then sell it in the FX market to restore their dollar positions. Each trade is small, but the flow is systematic, and it connects stablecoin demand directly to exchange rates.
Brazil felt it, Korea did not
Kim and Cho compared South Korea and Brazil to illustrate the effect. Brazil has a direct fiat-stablecoin pair on global exchanges; Korea does not. Using weekly data, the researchers measured how a one-standard-deviation increase in Google searches for bitcoin, a proxy for crypto investment demand, affected both markets.
In Brazil, that demand signal was linked to a 0.118% depreciation of the real and a 0.109 percentage point rise in the local stablecoin premium. In South Korea, the same shock raised the local stablecoin premium by about 0.85 percentage points but had no statistically significant effect on the won. The contrast reflects the absence of global intermediaries in Korea’s stablecoin trading structure. Where the plumbing connects directly to global venues, the FX effect shows up. Where it does not, pressure stays trapped in domestic premia, the so-called kimchi premium.
| Market | Direct fiat pair | Observed effect of crypto demand |
|---|---|---|
| Brazil (real) | Yes | Real depreciated 0.118%; stablecoin premium rose 0.109 pp |
| South Korea (won) | No | Premium rose 0.85 pp; no significant won effect |
Premiums narrow when pairs go live
Across the twelve currencies studied, local stablecoin premiums fell by 0.33 to 0.38 percentage points after fiat-stablecoin pairs went live on the global exchange. Stablecoins also flowed from Binance into local markets whenever local prices rose above Binance prices, consistent with cross-exchange arbitrage activity.
The premium matters because it measures how much locals pay above the official dollar rate to get stablecoin exposure. A narrowing premium sounds like good news for buyers, and it often is. But the study shows the offsetting cost lands on the currency itself when global market makers do the balancing. The effect is a transfer from the domestic premium to the exchange rate, not a disappearance of pressure.
Why it matters for Korea
Korea is the largest local-currency stablecoin market in Asia-Pacific. Won purchases of the tokens reached $64 billion in the twelve months through June 2025, according to Chainalysis data cited in the coverage. If Korean rules later allow more corporate and foreign participation in crypto markets, the transmission channel the study describes becomes directly relevant to the won-dollar rate rather than a theoretical curiosity.
The authors suggested deeper foreign exchange liquidity and wider international use of the won could help the market absorb shocks as links between stablecoins and traditional currency markets grow. Both are long-running policy goals in Seoul, and the study gives them a concrete market-structure argument rather than a purely monetary one.
Regulatory implications
The findings arrive as regulators worldwide debate how to treat stablecoin issuance and trading. The US GENIUS Act created a federal framework for payment stablecoins, the EU operates under MiCA, and several Asian jurisdictions are drafting their own rules. None of these frameworks directly addresses the FX-market spillover this study documents. Central banks in emerging markets have voiced similar concerns for years, usually without empirical backing. This paper offers measured estimates: small effects per event, but systematic, and concentrated exactly where regulators feared they would be.
The Bank of Korea published the full study on its website, and Korean financial media covered it under headlines about stablecoin trading swaying the won exchange rate. For a central bank that has watched its currency trade through repeated regional crises, the message is that stablecoin market structure is now FX policy.
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