Greater stablecoin access may deepen the interaction between digital-asset activity and foreign exchange markets, according to new Korean research.
Demand for dollar-backed stablecoins such as USDT and USDC can place downward pressure on national currencies when investors gain direct access through fiat trading pairs, according to a Bank of Korea study. Researchers examined 12 currencies and found that Binance, a major global cryptocurrency exchange, strengthened the link between crypto activity and foreign exchange markets by introducing direct local-currency stablecoin pairs.
Direct trading changed how demand moved through the market. Instead of pressure appearing mainly as a premium on stablecoins in domestic markets, global liquidity providers could receive local currency when selling USDT or USDC and then exchange those funds for US dollars. The study found that buyer-initiated stablecoin flows were associated with depreciation in currencies with direct trading pairs.
The research also found that local stablecoin premiums fell by around 0.33 to 0.38 percentage points after direct fiat pairs were introduced, indicating greater integration between domestic and global markets. However, the researchers stressed that the findings do not mean stablecoin demand automatically causes currency depreciation, as the effect depends on market structure, liquidity and access to international intermediaries.
South Korea offered a contrasting case because Binance did not provide a direct won-stablecoin pair during the period studied. Stronger stablecoin demand was instead reflected in domestic price premiums, with no statistically significant impact on the won’s exchange rate.
Why does it matter?
The findings point to a broader shift in how digital assets can interact with national monetary systems as stablecoins become more deeply embedded in global finance. For policymakers, the issue is not just how to regulate crypto markets, but how their growing connection with currencies could reshape international capital flows. The research suggests that the structure of digital-asset markets could become an increasingly important factor in how national currencies respond to global digital-asset demand.
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