Bank of Korea study finds stablecoin pairs can weaken local currencies

The Bank of Korea study found that demand for dollar-backed stablecoins can push national currencies lower when global exchanges let investors buy the tokens directly with fiat currency. Researchers Jihyun Kim and Sangheum Cho examined Binance's introduction of direct trading between currencies such as the Brazilian real and stablecoins including USDT and USDC. Professional market makers supplied the tokens for these trades. The market makers then had an incentive to sell local currency and buy dollars in the foreign exchange market to balance their positions. Local stablecoin premiums fell 0.33 to 0.38 percentage points after Binance introduced fiat-stablecoin pairs. Stablecoins also tended to flow from Binance to local exchanges when local prices rose above Binance's prices. A one-standard-deviation rise in Bitcoin searches was linked to a 0.118% depreciation of the Brazilian real. Bitcoin searches served as a proxy for investment demand. Won purchases of stablecoins reached $64 billion in the 12 months through June 2025. Korea was the largest local-currency stablecoin market in Asia-Pacific, according to Chainalysis data.