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Stablecoin & Crypto Regulation News
Demand for dollar-backed stablecoins can put downward pressure on local currencies once a global exchange introduces direct trading pairs between those stablecoins and local fiat currencies, according to a study published Sept. 3 by the Bank of Korea. The paper was authored by Jihyun Kim and Sangheum Cho, economists in the bank’s International Department.
The researchers examinedwhat happened to exchange rates after a major global exchange introduced fiat-stablecoin trading pairs for specific currencies. The stablecoins at the center of the study wereTether (USDT) andUSD Coin (USDC), both pegged to the US dollar. The analysis covered 12 currencies with sufficient cross-exchange trading history, with pairing dates ranging from 2019 to 2025.
The mechanism runs through professional market makers. When a fiat-stablecoin pair goes live on a global exchange, market makers step in as counterparties to investors buying stablecoins with their local currency. After supplying the stablecoins, those market makers hold the local currency and then sell it in the FX market to restore their dollar positions. That sequence connects stablecoin demand directly to currency depreciation.
Brazil Felt It, Korea Did Not
Kim and Cho compared South Korea and Brazil to illustrate the effect. South Korea does not have a direct fiat-stablecoin pair available through global exchanges for the won. Brazil does. Using weekly data, the researchers measured how a one-standard-deviation increase in Google searches for<a href="https://xpertsstudio.com/bitcoin-trails-gold-by-10x-and-cz-thinks-that-ends-next-cycle/” title=”Bitcoin Trails Gold By 10X, And CZ Thinks That Ends Next Cycle”>Bitcoin (BTC), used as a proxy for crypto investment demand, affected both markets.
In Brazil, that demand signal was linked to a 0.118% depreciation of the real and a 0.109 percentage point increase in the localstablecoin premium. In South Korea, the same shock raised the local stablecoin premium by about 0.85 percentage points but had no statistically significant effect on the won. The contrast reflects the absence of global intermediaries in Korea’s stablecoin trading structure.
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Korea Holds the Region’s Largest Local-Currency Stablecoin Market
Across the broader set of 12 currencies studied, local stablecoin premiums fell by 0.33 to 0.38 percentage points after fiat-stablecoin pairs went live on the global exchange. Stablecoins also tended to flow from the global exchange into local markets whenever local prices rose above those on the global platform, consistent with cross-exchange arbitrage activity.
The findings carry particular weight for South Korea. Won-denominated stablecoin purchases reached $64 billion in the 12 months through June 2025, the largest such volume for any local currency in Asia-Pacific, accordingto Chainalysis data. Korea’scryptocurrency market is dominated by retail investors, with corporate and foreign participation restricted under existing rules. Kim and Cho concluded that any regulatory change expanding that participation should be planned alongside efforts to internationalize the won and deepen FX market liquidity, so the market can absorb shocks if stablecoin demand and exchange rates become more directly linked.
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