Bank of Korea study finds Binance stablecoin pairs can weaken local currencies

Stablecoin demand linked to currency depreciation

A study by the Bank of Korea found that when investors buy dollar-backed stablecoins directly with local money, it can lower the value of that local currency. The research looked at what happened when Binance, a major crypto exchange, began offering direct trading pairs between local currencies and stablecoins.

Stablecoins are digital tokens whose value is tied to a real-world asset, usually the US dollar. When traders swap their local money for these tokens on Binance, it creates buying pressure that can affect exchange rates.

How market makers move the market

The researchers explained that professional traders, known as market makers, supply the stablecoins on the exchange. To balance their positions, these market makers often sell the local currency and buy dollars in the foreign exchange market. This process creates a direct link between stablecoin demand and national currency value.

The analysis covered 12 currencies where Binance introduced these pairs between 2019 and 2025.

Key numbers from the study

• Binance fiat pairings reduced local stablecoin premiums by 0.33 to 0.38 percentage points.
• A rise in Bitcoin searches, used as a proxy for investment demand, was linked to a 0.118% depreciation of the Brazilian real.
• The same search increase raised Brazil’s stablecoin premium by 0.109 percentage points.
• Won purchases of stablecoins reached $64 billion in the 12 months through June 2025 in South Korea.

South Korea shows a different pattern

Unlike other countries studied, South Korea does not have a direct Binance trading pair for the won. Because of this, the local currency did not show significant exchange-rate response to stablecoin demand. Instead, buying pressure mainly raised the local stablecoin premium, which is the extra cost to buy stablecoins outside of Binance.

However, the study noted that if regulations change to allow more corporate and foreign participation in crypto markets, these findings could become very relevant for the won.

Why this matters for currency markets

The research highlights how crypto markets are becoming more connected to traditional finance. As stablecoin use grows globally, the way local currencies interact with digital assets will likely continue to evolve. The authors suggested that deeper foreign exchange liquidity and wider use of the Korean won abroad could help the market handle these shocks as the links between stablecoins and traditional currency markets grow.

Sources

• CoinDesk