Stablecoin demand does not necessarily weaken a local currency on its own. The Bank of Korea’s latest research points to a more specific condition: demand becomes an exchange-rate force when market infrastructure gives it a direct route from local fiat into a US dollar-linked stablecoin.
That distinction is consequential. In the Bank of Korea’s sample, higher stablecoin premia were associated with significant depreciation in local currencies after a global exchange introduced direct fiat-to-USD-stablecoin trading pairs. Korea, however, did not show a statistically significant exchange-rate effect during the period studied because Binance did not offer a direct won–USD stablecoin pair. Korean demand appeared instead in the premium paid for stablecoins.
The contrast makes the central issue less about whether a stablecoin is used and more about how users reach it. A premium can signal strong demand while remaining primarily a price dislocation within crypto markets. A liquid direct fiat pair can convert the same demand into an FX transaction. That is the transmission channel policymakers need to assess.
Direct fiat–stablecoin pairs turn a premium into FX demand
In its September 3 issue note, the Bank of Korea examined the relationship between stablecoin premiums and exchange rates around the introduction of direct fiat–USD stablecoin pairs on a global exchange. Its finding was not a general claim that stablecoins mechanically depreciate every currency. It was that, after such pairings were created, a higher premium was associated with significant depreciation in the paired local currency.
A stablecoin premium is useful here because it captures a gap between the local-market price of a dollar-pegged token and its parity value. Without a direct route between the local currency and the stablecoin, that gap can persist as a local pricing imbalance. Users may be willing to pay more for dollar-linked crypto exposure, but the market does not necessarily provide a seamless mechanism for that pressure to be expressed in conventional FX trading.
Direct pairs change the practical economics. They allow a user holding local fiat to acquire a USD stablecoin through one market rather than navigating a more fragmented chain of crypto trades or intermediaries. At that point, demand for the token can also amount to demand to move out of the local currency and into a dollar-linked instrument. The BOK’s result suggests that this market design can connect crypto pricing pressures to the exchange rate.
The point is narrower, and more useful, than the familiar assertion that dollar stablecoins create “dollarisation” pressure. The BOK’s evidence identifies an execution mechanism. It indicates that exchange access and trading-pair design influence whether stablecoin demand remains visible as a premium or feeds through to the currency itself.
That should also temper broad conclusions from the study. The finding concerns an association following the addition of direct pairs; it does not establish that stablecoin adoption alone is sufficient to explain a local currency’s movements. FX markets respond to many forces. But the evidence does show why an apparently technical decision about available trading pairs can have macro-financial relevance.
Korea’s missing won pair has contained the exchange-rate effect, not the demand signal
Binance had no direct won–USD stablecoin pair, and the BOK found no statistically significant effect on the won’s exchange rate in its sample. The central bank said Korean buying pressure was reflected mainly in higher stablecoin premia.
Introducing relevant fiat–stablecoin pairs elsewhere produced a different observable result: stablecoin premia declined significantly by roughly 0.33 to 0.38 percentage points, according to Seoul Economic Daily’s reporting on the BOK study. That decline is consistent with improved price integration between stablecoin and conventional FX markets.
Korea’s missing pair helps explain why the two findings are not contradictory. Domestic stablecoin demand was not necessarily absent; the market structure changed where it appeared. Users could face a higher local stablecoin price when direct conversion into the FX market was limited, whereas easier arbitrage and conversion could bring the price closer to its FX-equivalent value.
The broader lesson from the BOK’s work is a trade-off in market access. Restricted access can leave premiums and fragmented pricing in place. Greater access can improve price alignment while making local-currency demand for dollar stablecoins more immediately visible and consequential in FX markets. Neither outcome supports a simple “more regulation” or “less regulation” conclusion.
BIS estimates show USD stablecoin flows often begin as non-dollar FX conversion
The BOK study is supported by a broader cross-country pattern identified by the Bank for International Settlements. A BIS working paper published in March, covering four USD-pegged stablecoins and 27 fiat currencies, estimates that a 1% exogenous increase in net stablecoin inflows raises stablecoin-FX parity deviations by about 40 basis points and depreciates the local currency by about 5 basis points.
The magnitude of the estimated exchange-rate response is small in basis-point terms, but its direction matters. It supports the proposition that flows into dollar stablecoins can carry an FX component rather than representing only transfers within the crypto ecosystem.
The paper’s flow data make the mechanism more concrete. More than 70% of cumulative net inflows into USD stablecoins between 2021 and 2025 originated from non-USD currencies. That does not mean every stablecoin purchase is a direct sale of local currency for dollars. It does mean that, in aggregate, the inflows studied frequently began outside the dollar and therefore commonly involved a conversion dimension.
This evidence helps explain why the trading-pair question matters. If stablecoin flows are often funded from non-USD currencies, the availability, liquidity and pricing of the conversion route will help determine whether the transaction is isolated in a crypto venue, absorbed through intermediaries, or transmitted more directly to the foreign-exchange market.
It also complicates the tendency to regard stablecoins exclusively as settlement assets. A USD-pegged token can be used for trading or transfers, but for a buyer starting with won or another non-dollar currency, acquiring it may first be an exchange-rate transaction. The monetary and FX implications depend on that first step as much as on what the holder does with the token afterward.
FX-market design determines whether stablecoin growth becomes a macroeconomic vulnerability
On Binance, the absence of a direct won–USD stablecoin pair meant that Korean stablecoin buying pressure was reflected mainly in higher stablecoin premia. The study found no statistically significant exchange-rate effect during the period examined. When relevant fiat–stablecoin pairs were introduced, premia declined and price integration between stablecoin and conventional FX markets improved.
That evidence puts conversion infrastructure at the centre of the question. It does not show that stablecoin growth inevitably causes depreciation; the BOK says the transmission to FX depends on market structure, intermediary access and liquidity.
The implication for policy is wider than a crypto-specific restriction. The BOK says digital-asset regulation should be considered alongside won internationalisation and deeper FX liquidity. Intermediaries, funding and settlement arrangements, and the depth of local FX markets all shape whether additional demand is absorbed smoothly or reaches the currency market as pressure.
The BOK has separately described broader macroeconomic risks. In its March 2026 Monetary Policy Report, it warned that widespread stablecoin use could weaken monetary-policy effectiveness, facilitate capital outflows, increase exchange-rate volatility and reduce banks’ deposit base if users shift funds out of bank deposits and into stablecoins.
Those warnings do not require every transmission route to involve a direct exchange pair. The pair-based evidence identifies one route through which broader demand for dollar-linked assets can become sustained pressure on a domestic currency.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
