Bank of Korea study finds dollar stablecoins can weaken local currencies

A Bank of Korea study by Jihyun Kim and Sangheum Cho reveals that direct fiat-to-stablecoin trading pairs on global exchanges like Binance can devalue national currencies. When investors buy dollar-backed stablecoins directly, market makers sell the received local currency for dollars to balance their positions, transmitting crypto demand shocks into foreign exchange markets. This finding highlights a critical policy tension as South Korea's Financial Services Commission commits to a major blockchain capital market transition by February 2027, which ultimately requires stalled stablecoin legislation to achieve full on-chain settlement.

Bank of Korea stablecoin study

• ▪A Bank of Korea study published on September 3, 2026, found that demand for dollar-backed stablecoins can place downward pressure on national currencies when global exchanges allow direct fiat trading pairs.
• ▪A weekly test in the Bank of Korea study showed that a one-standard-deviation increase in Google searches for Bitcoin was associated with a 0.118% depreciation of the Brazilian real and a 0.109-percentage-point increase in Brazil's stablecoin premium.
• ▪The Bank of Korea study found that direct fiat-stablecoin listings on Binance reduced local stablecoin premiums by approximately 0.33 to 0.38 percentage points.
• ▪The Bank of Korea study, authored by researchers Jihyun Kim and Sangheum Cho, analyzed 12 currencies with pairing events on Binance spanning from 2019 to 2025.

Binance fiat-pair transmission mechanism

• ▪When global exchanges introduce direct fiat-stablecoin pairs, market makers selling stablecoins receive local currency and are incentivized to sell that local currency for dollars in the conventional foreign exchange market to balance their positions.
• ▪The Bank of Korea study found that stablecoins tended to flow from Binance to local exchanges when domestic prices rose above Binance levels, improving price integration across venues.

Korean won stablecoin market

• ▪South Korea, which lacked a direct Binance won-stablecoin pair during the studied period, showed no statistically measurable exchange-rate response to stablecoin buying pressure, which instead mainly raised the local stablecoin premium.
• ▪According to Chainalysis data, won-denominated purchases of stablecoins reached approximately $64 billion in the 12 months through June 2025, making South Korea the largest local-currency stablecoin market in the Asia-Pacific region.
• ▪The Bank of Korea has supported a regulatory model requiring stablecoin issuers to operate as bank-majority consortia holding at least 51% ownership, citing financial and monetary stability concerns.

South Korea tokenized securities rollout

• ▪The Digital Asset Basic Act, which would establish stablecoin issuance rules and licensing requirements in South Korea, has been stalled in the National Assembly since late 2025 due to a regulatory dispute between the Bank of Korea and the Financial Services Commission.
• ▪South Korea's Financial Services Commission formally committed on September 4, 2026, to a policy roadmap to transition mainstream stocks, bonds, and funds onto blockchain infrastructure by February 2027.

February 2027 blockchain implementation

• ▪South Korea's tokenized securities framework will launch Phase One on February 4, 2027, when amendments to the Electronic Registration Act take effect to grant blockchain-based distributed ledgers legal recognition as valid securities registries.
• ▪Phase One of South Korea's tokenized securities rollout will settle cash payments off-chain through the Korea Securities Depository's existing conventional settlement infrastructure, rather than using on-chain atomic delivery-versus-payment.
• ▪Samsung SDS is under contract to build the Korea Securities Depository's tokenized securities management platform, targeting completion by February 2027.

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