Bank of Korea researchers found that dollar-backed stablecoins can transmit buying pressure into exchange rates when investors receive direct access through fiat trading pairs. According to the study published on September 3, the effect appeared after Binance introduced trading between selected local currencies and stablecoins such as USDT and USDC. Local stablecoin premiums declined by approximately 0.33 to 0.38 percentage points following Binance pair introductions, with the price moving closer to corresponding spot exchange rates. The study, written by Jihyun Kim and Sangheum Cho, examined 12 currencies using pairing events between 2019 and 2025 to identify transmission effects.
The research identified a shock-transmission channel where market makers can sell received local currencies for dollars while balancing stablecoin trading positions. As reported by the Bank of Korea, net buyer-initiated stablecoin order flow was associated with depreciation among paired currencies, indicating that trading direction mattered beyond just price differences. Before direct pairing, buying pressure mainly affected domestic stablecoin premiums. After pairing, some pressure passed into exchange rates through global market makers managing fiat exposure through conventional FX markets. The study used Google searches for Bitcoin as a proxy for crypto investment interest, finding that a one-standard-deviation increase in search activity was associated with 0.118% depreciation of the Brazilian real and a 0.109 percentage-point increase in Brazil's stablecoin premium.
South Korea provided a useful comparison because Binance did not offer a direct won-stablecoin pair during the study period. According to the research, Korean investors mainly accessed stablecoins through domestic exchanges or other indirect channels, resulting in no statistically measurable relationship between stablecoin buying pressure and the won's exchange rate. Instead, stronger demand mainly raised the price premium for stablecoins inside the Korean market. Won-denominated purchases of stablecoins reached about ₹64 billion during the 12 months through June 2025, making South Korea Asia-Pacific's largest local-currency stablecoin market during that period, as reported by Chainalysis.
The findings support concerns about digital dollar demand affecting national currencies through new channels. As noted by the Bank of Korea, the relationship could change if South Korea expands access for corporations and foreign investors. The central bank has supported bank-led won-backed issuance during the market's early stages, citing monetary and financial stability concerns. The government is developing plans to expand offshore won settlement and modernize foreign exchange rules, which could make the currency more accessible internationally and potentially increase the market's capacity to absorb cross-border flows. The study emphasizes that exchange design determines whether stablecoin demand remains a crypto-market premium or enters the conventional FX market.
