The Bank of Korea Just Showed How Stablecoins Can Push National Currencies Lower

The Bank of Korea has found that dollar-backed stablecoins can put real downward pressure on national currencies once investors gain direct access to tokens like USDT and USDC through local-currency trading pairs on global exchanges.

By Raj Patel | September 6, 2026

The research, published on September 3 by economists Jihyun Kim and Sangheum Cho, examined twelve currencies with enough local and global exchange data to measure what happens when a major exchange introduces direct fiat-to-stablecoin trading. For regular investors, the study matters because it sketches out a future where demand for digital dollars in one country can visibly move that country’s exchange rate — a channel regulators are only beginning to understand.

The Hook: A Central Bank Says Stablecoins Move Exchange Rates

Central bankers have warned for years that dollar stablecoins could “cryptoize” emerging economies. The Bank of Korea study is different: it puts numbers on the concern. The trigger the researchers identified was the rollout of direct trading pairs between selected local currencies and stablecoins such as USDT and USDC on Binance, the world’s largest crypto exchange.

Before those pairs existed, investors in many countries had to buy stablecoins through domestic platforms or peer-to-peer markets. That separation created a local premium — the price of USDT on a domestic exchange could sit above the official dollar exchange rate when demand outstripped supply. Capital controls and transfer costs stopped arbitrage traders from closing the gap quickly.

The Evidence: What Twelve Currencies Revealed

The researchers studied pairing events between 2019 and 2025 and found a clear pattern, summarized in the key data points:

• Local stablecoin premiums fell by 0.33 to 0.38 percentage points after Binance introduced direct fiat pairs, meaning local stablecoin prices moved closer to the real exchange rate.
• Net buyer-initiated stablecoin flows were associated with currency depreciation among the paired currencies — the direction of trading mattered, not just price differences.
• Korea itself showed elevated stablecoin premiums but no measurable exchange-rate response, because Korean investors lacked direct Binance pairing access.

The mechanism is simpler than it sounds. A global market maker selling USDT to someone paying in Brazilian reais now holds reais it does not want. To rebalance, it sells those reais for dollars in the conventional foreign exchange market. Multiply that across thousands of trades, and stablecoin buying demand starts to feed directly into currency markets — what the researchers call a shock-transmission channel.

The Core Conflict: Cheap Digital Dollars Versus Currency Stability

The study’s nuance is important: it does not claim stablecoin demand always causes depreciation. The measured effect depended on market structure, access to global intermediaries, and whether direct trading pairs existed. Korea’s own case is the proof — heavy local demand for stablecoins, but no measurable hit to the won while that demand stayed routed through domestic channels.

The findings echo earlier warnings from the International Monetary Fund, whose officials have cautioned that local tokens could speed up conversion into dollar stablecoins when on-chain markets let users move between currencies without touching the traditional banking system. An IMF official previously flagged that this could accelerate dollar adoption in economies already under pressure.

For policymakers in emerging markets, the tension is stark. Stablecoins offer citizens a cheap hedge against inflation and a fast way to send money across borders. But the same tool gives capital flight a new on-ramp that bypasses banks entirely. Regulators must now decide whether to restrict access, build local alternatives, or accept the FX consequences.

Market Implications: Why This Matters Beyond Korea

The study lands amid a global scramble to write stablecoin rules. The United States has already passed federal stablecoin legislation, the European Union’s MiCA regime is in force, and dozens of countries are debating their own frameworks. Research like this gives ammunition to officials who want tighter limits on foreign-currency tokens, and it strengthens the case for local stablecoin projects that stay inside a country’s regulatory perimeter.

For investors, the takeaway is two-sided. Issuers like Tether and Circle gain a data point showing their products are systemically relevant — genuinely woven into global finance, not a crypto sideshow. At the same time, that relevance invites exactly the kind of scrutiny that can reshape the business overnight. Exchange rate transmission is the kind of finding that ends up quoted in finance ministries from Seoul to São Paulo.

The Verdict

The Bank of Korea has documented, with real market data, how digital dollars can leak into foreign exchange markets when the plumbing allows it. Nothing in the study suggests stablecoins are about to destabilize major currencies — the measured effects operated through specific pairings on one exchange over six years. But the direction is clear: as access widens, the wall between crypto demand and national currencies gets thinner. If you hold stablecoins, expect regulators to keep citing this study. If you live in an emerging market, the question of who controls your on-ramp to digital dollars just became an economic policy issue, not just a tech question.

The cryptocurrency market remains highly volatile. This article is for informational purposes only and does not constitute financial advice.