Dollar-backed stablecoins can push local currencies lower, Bank of Korea study finds

Demand for dollar-backed stablecoins such as USDT and USDC can put downward pressure on local currencies when global exchanges allow investors to buy them directly with fiat, according to a Bank of Korea study.

Researchers Jihyun Kim and Sangheum Cho examined Binance listings that enabled direct trading between local currencies and dollar-pegged stablecoins. When investors buy stablecoins with local currency, market makers may sell that currency and buy dollars to hedge their positions, creating pressure on foreign-exchange markets.

The study found that local stablecoin premiums fell by around 0.33–0.38 percentage points after Binance introduced fiat-stablecoin pairs. Stronger stablecoin buying pressure was also associated with depreciation in currencies directly paired with the tokens.

Brazil’s real, for example, weakened as stablecoin demand increased. A one-standard-deviation rise in Google searches for bitcoin was associated with a 0.118% depreciation of the real and a 0.109-percentage-point increase in Brazil’s stablecoin premium.

Korea showed a different pattern because the won does not have a direct Binance stablecoin pair. Instead, higher demand mainly increased the local stablecoin premium without a significant impact on the exchange rate.

The findings are particularly relevant as stablecoin use grows in Korea. Won purchases of stablecoins reached $64 billion in the 12 months through June 2025, according to Chainalysis, making Korea the largest local-currency stablecoin market in the Asia-Pacific region.

The researchers said deeper FX liquidity and wider international use of the won could help reduce the impact of future shocks as stablecoins become increasingly connected to traditional currency markets.

The analysis covered 12 currencies using cross-exchange data from 2019 to 2025.