Bank of Korea: Binance Stablecoin Trading Puts Pressure on Local Currencies
The study links direct USDT and USDC trading on Binance to pressure on local currencies through market makers and the FX market. In emerging markets especially, stablecoin demand can spill over into exchange rates.
Key Takeaways
- A Bank of Korea study links direct stablecoin trading on Binance to weaker local currencies.
- Fiat-stablecoin pairs on Binance lowered local stablecoin premiums by an average of 0.33 to 0.38 percentage points.
- The researchers found that stronger buying pressure in stablecoins was tied to depreciation in local currencies, especially in Binance-linked markets.
A Bank of Korea study found a clear link between direct stablecoin trading on Binance and weaker local currencies. According to the researchers, demand for dollar-pegged stablecoins can spill over into exchange rates through the FX market, especially when investors can buy the tokens directly with fiat money.
How Binance Opens This Channel
The study by Jihyun Kim and Sangheum Cho looked at cases where Binance added direct trading between national currencies, such as the Brazilian real, and stablecoins like USDT and USDC. That let investors buy stablecoins with local currency, while professional market makers supplied the tokens.
Those market makers then had an incentive to hedge their positions by selling local currency and buying dollars in the foreign exchange market. According to the researchers, that created a path where demand for stablecoins did not stay inside crypto, but also affected exchange rates.
What the Study Found
After fiat-stablecoin pairs were introduced, local stablecoin premiums fell by an average of about 0.33 to 0.38 percentage points. The researchers also saw stablecoins flow more often from Binance to local exchanges when the local price was above Binance's price.
In Binance-linked currencies, stronger buying pressure in stablecoins was tied to depreciation of the local currency. Korea itself did not show a significant exchange-rate reaction, because there is no direct Binance-won pair. There, the buying pressure showed up mainly in the local stablecoin premium.
The study looked at 12 currencies with enough data, using pairing data from 2019 to 2025. In a separate test, more Google search interest in bitcoin, used as a proxy for crypto demand, was also linked to a depreciation of the Brazilian real and a higher stablecoin premium in Brazil.
Why This Matters
For European readers, this shows that stablecoins are not just a crypto topic, but can also act as a bridge to the traditional currency market. Earlier research from international institutions had already pointed to similar patterns: strong stablecoin inflows can weaken local currencies and raise the cost of dollar funding. That makes the debate relevant for regulators and markets where stablecoin use keeps growing, especially in emerging markets where arbitrage is less effective.
That broader debate is also playing out in Europe, where players like Revolut are rolling out new euro stablecoin products under MiCA. Those initiatives show how quickly stablecoins are shifting from trading tools to a payments and settlement layer.
