Bank Of Korea Study Links Stablecoin Buying To Currency Depreciation

A Bank of Korea study finds that demand for dollar-backed stablecoins can push national currencies lower once global exchanges let investors buy the tokens directly with local fiat. 

Researchers Jihyun Kim and Sangheum Cho examined what happened after Binance introduced direct trading pairs between the Brazilian real and dollar-pegged stablecoins such as USDT and USDC. The study is published on the central bank’s website.

How Direct Fiat Pairs Change Market Behavior

The listings let investors buy stablecoins directly with local currency instead of routing through an intermediate step, while professional market makers supplied the tokens on the other side of those trades. Those market makers then had an incentive to sell the local currency and buy dollars in the foreign-exchange market to rebalance their own positions, according to the study.

That mechanism created a channel through which retail and institutional stablecoin demand could feed through into broader currency markets, even though the initial transaction never touched a traditional FX desk. 

The researchers found local stablecoin premiums, the gap between a stablecoin’s local price and its global dollar value, fell by about 0.33 to 0.38 percentage points after the fiat pairs launched. 

That narrowing suggests the direct pairing gave local buyers a more efficient route into dollar exposure than existed before.

Stablecoins also tended to flow from the global exchange to local exchanges when local prices rose above the global price, a pattern consistent with arbitrage trading closing the gap between markets. The study treats this flow pattern as further evidence that the new pairs functioned as a genuine price-discovery mechanism rather than a purely cosmetic listing change.

Currency Effects Extended Beyond Crypto Markets

The effect was not confined to token prices, the study found. For currencies with a direct dollar-stablecoin pairing on the exchange studied, stronger stablecoin buying pressure was linked to depreciation of the local currency itself, not just movement in the stablecoin’s local premium.

Korea, which lacks a direct won-stablecoin pair on the exchange the researchers studied, showed no significant exchange-rate response to the same kind of buying pressure. Instead, buying pressure in Korea’s case mainly raised the local stablecoin premium rather than moving the won directly. 

The researchers frame this contrast as evidence that the currency-depreciation channel depends specifically on the existence of a direct fiat pairing, rather than on stablecoin demand in general.

The Brazil Test And Study Scope

In a separate test using weekly data, the researchers found a one-standard-deviation increase in Google searches for Bitcoin, used as a proxy for crypto investment demand, was associated with a 0.118% depreciation of the Brazilian real. The same increase raised Brazil’s stablecoin premium by 0.109 percentage points.

The researchers chose Bitcoin search volume as their demand proxy because it offers a consistent, publicly available weekly measure across markets, unlike trading volume figures that can vary in quality and availability by exchange. 

The approach let them isolate a demand signal that was not itself derived from the stablecoin trading data they were trying to explain.

The full analysis covered twelve currencies with sufficient cross-exchange data for the test, with pairing dates across those markets spanning 2019 to 2025. 

That range gave the researchers multiple market cycles and varying degrees of capital-control regimes to test whether the depreciation channel held consistently, rather than relying on a single currency or a narrow time window.

Findings Arrive As Korean Stablecoin Use Grows

The study lands as stablecoin activity in Korea has expanded quickly over the past year. Won purchases of stablecoins reached $64 billion in the twelve months through June 2025, according to blockchain analytics data cited alongside the study, making Korea the largest local-currency stablecoin market in the Asia-Pacific region by that measure.

That volume gives the study’s findings direct relevance to Korean policymakers even though the won itself showed no measurable depreciation effect in the data reviewed. 

The scale of existing won-stablecoin activity means any future change to how that activity is structured, including the introduction of a direct fiat pairing, would apply to a market already large by regional standards.

Implications For Future Regulation

The authors said the findings could matter for Korea if regulators later allow broader corporate and foreign participation in the country’s crypto markets. 

They said deeper foreign-exchange liquidity and wider international use of the won could help the market absorb shocks as the links between stablecoins and traditional currency markets deepen over time.

The study does not identify a mechanism specific to Korea beyond the current absence of a direct won-stablecoin pairing. The authors frame the currency-market implications as a consideration for future policy decisions rather than a finding tied to present conditions. 

If a direct pairing were introduced, the study’s own findings from other markets suggest the won could become more exposed to the same depreciation channel observed in Brazil and the other currencies studied.