Demand for dollar-backed stablecoins can put downward pressure on local currencies when global exchanges allow investors to buy the tokens directly with fiat, according to a Bank of Korea study.

The study examined what happened after Binance introduced direct trading between local currencies, including the Brazilian real and the Turkish lira, and dollar-pegged stablecoins such as USDT and USDC. The researchers found that stablecoin premiums fell by 0.33 to 0.38 percentage points after Binance rolled out fiat-stablecoin pairs, while stronger demand for the tokens was associated with depreciation of local currencies against the dollar. The question has taken on added urgency as dollar-backed tokens such as USDT and USDC have grown into a market measured in the hundreds of billions of dollars in circulation, expanding the channels through which dollar exposure can move across borders.

Brazil as a case study

Brazil offered a clear example of the dynamic. Investors can buy dollar stablecoins on Binance directly with Brazilian reais, which means rising demand can translate into actual dollar purchases. The study found that the real depreciated 0.12% as stablecoin demand increased. Brazil is one of the larger crypto markets in Latin America, and the real and the Turkish lira are both currencies of economies that have historically experienced episodes of currency pressure, conditions under which savers often seek dollar exposure.

The findings echo earlier warnings about the macroeconomic effects of dollar-linked tokens in developing economies. As Moody's Ratings cautioned, "In emerging markets, high penetration of USD-linked stablecoins in particular weaken monetary transmission."

A different mechanism in South Korea

The mechanism works differently in South Korea, where investors cannot directly buy stablecoins with won on Binance. Domestic traders largely exchange existing stablecoin holdings among themselves, so increased demand is reflected in stablecoin prices rather than directly in the foreign exchange market. This stands in contrast to jurisdictions where crypto-to-fiat on-ramps for stablecoins are directly available, and it illustrates how much the currency effect depends on market structure rather than on stablecoin demand alone.

That could change if South Korea allows greater participation by corporations and foreign investors in domestic crypto exchanges, the study said. Such changes could narrow price differences between domestic and overseas stablecoins while strengthening the link between crypto markets and foreign exchange rates. The question is directly relevant to current policy debates in Seoul, where lawmakers have been working on digital asset legislation that would establish a won-based stablecoin framework, including proposals to permit non-financial companies to issue stablecoins under regulatory conditions.

"If the market structure changes, with wider participation by corporations and foreigners in domestic virtual asset exchanges, the link between the stablecoin market and the foreign exchange market could strengthen," said Kim Ji-hyun, a manager on the Bank of Korea's international finance research team.

Policy recommendations

The researchers recommended that digital asset regulatory reforms be pursued alongside efforts to internationalize the won and improve the structure of South Korea's foreign exchange market. Won internationalization has been a stated government goal, and the study suggests that how stablecoin rules are designed will bear on that agenda.

The findings add to growing concerns among central banks about the potential impact of dollar-backed stablecoins on monetary policy and currency stability as their use expands globally. Related reporting has shown that Africa records the highest stablecoin conversion spreads according to January 2026 data, and that South Africa's stablecoin experience offers a policy lesson for emerging markets, according to the IMF.