CoinDesk
A Bank of Korea study from researchers Jihyun Kim and Sangheum Cho found that demand for dollar-backed stablecoins can push national currencies lower once global exchanges allow investors to buy the tokens directly with fiat. The mechanism runs through professional market makers: when Binance introduced direct pairings for currencies like the Brazilian real against USDT and USDC, those market makers sold the local currency and bought dollars in the FX market to balance their positions. After those listings, local stablecoin premiums fell 0.33 to 0.38 percentage points.
Why it matters
The finding puts a central-bank stamp on a transmission channel crypto traders have understood for years but policymakers have mostly dismissed. Stablecoin demand is no longer a closed-loop crypto phenomenon; it now touches the FX market whenever a large global exchange opens direct fiat pairings. Korea is the natural next test case: won purchases of stablecoins reached $64 billion in the 12 months through June 2025, the largest local-currency stablecoin market in Asia-Pacific according to Chainalysis.
Market impact
For Binance-paired currencies, stronger stablecoin buying pressure was already linked to local-currency depreciation. Korea, which still lacks a direct Binance won-stablecoin pair, showed no significant exchange-rate response so far; buying pressure instead mainly raised the local stablecoin premium, a closed-loop distortion that has not yet spilled into FX. A separate weekly test using Google searches for bitcoin as an investment-demand proxy found a one-standard-deviation rise was associated with a 0.118% depreciation of the Brazilian real and a 0.109 percentage-point lift in its stablecoin premium. The study covered 12 currencies from 2019 to 2025, framing stablecoin policy as a live FX-stability question rather than a niche crypto debate.
Frequently asked questions
-
What did the Bank of Korea study actually find?
Demand for dollar-backed stablecoins can push national currencies lower once global exchanges allow direct fiat-to-stablecoin trading, via market makers hedging their stablecoin positions on FX desks.
-
How does the stablecoin-to-FX transmission work?
When Binance added direct fiat-to-stablecoin pairings like the Brazilian real against USDT and USDC, professional market makers sold the local currency and bought dollars in FX markets to balance their positions.
-
How big is Korea's stablecoin market?
Won purchases of stablecoins reached $64 billion in the 12 months through June 2025, the largest local-currency stablecoin market in Asia-Pacific per Chainalysis data.
-
Why does Korea not show FX effects yet?
Korea still lacks a direct Binance won-stablecoin pair, so stablecoin buying pressure has mainly raised the local stablecoin premium rather than spilling into the won FX market.
-
What did the bitcoin search proxy test show?
A one-standard-deviation rise in weekly Google searches for bitcoin was associated with a 0.118% depreciation of the Brazilian real and a 0.109 percentage-point lift in its stablecoin premium.
WuBlockchain
TheBlock
CryptoSlate
Crypto Rank News