Bank of Korea: Dollar Stablecoin Demand May Alter FX Flows

Researchers at the Bank of Korea published Issue Note No. 2026‑22 on Sept. 3, 2026, analyzing links between dollar stablecoins and foreign‑exchange markets. The paper was authored by Kim Ji‑hyun and Cho Sang‑heum and covers 2019–2025 data for 12 currencies.

The study focuses on two dollar stablecoins, USDT and USDC, and uses a one‑standard‑deviation rise in Bitcoin Google searches as a proxy for crypto demand. The authors treat the listing of a fiat–dollar stablecoin pair on Binance as the point when global intermediaries can hold both local currency positions and dollar stablecoins, allowing local purchases of stablecoins to behave economically like dollar purchases.

The note reports two main results. First, when Binance began supporting fiat–dollar stablecoin pairs in a local market, local dollar‑stablecoin premiums fell by about 0.33–0.38 percentage points, consistent with arbitrage as stablecoins moved from Binance into local venues. Second, after such listings, higher stablecoin premiums were associated with local‑currency depreciation against the dollar; before listings that relationship was not statistically significant.

In South Korea specifically, the authors find a one‑standard‑deviation increase in Bitcoin search interest raised the won‑denominated dollar‑stablecoin premium by roughly 0.85 percentage points while leaving the official won–dollar exchange rate statistically unchanged.

By contrast, the note examines Brazil, where Binance offers a BRL pair. There the same search shock raised the dollar‑stablecoin premium by about 0.11 percentage points and the real weakened by roughly 0.12%.

The paper reports that the median won‑denominated USDT premium since 2022 is 1.67%, versus a 30‑currency median near 0.8%. That premium sits close to levels reported for countries with tighter capital controls. The authors link the higher premium to limits on corporate and foreign participation in domestic virtual‑asset venues and to an absence of global intermediaries able to bridge local markets with international stablecoin liquidity.

The note cites data showing 18 months of net stablecoin outflows through June 2026 from licensed Korean venues. It also records that Korean banks are developing infrastructure ahead of completed rules, noting a 26 Aug. 2026 agreement by a major Korean bank with Visa to develop stablecoin payment rails.

On policy, the researchers recommend coordinating digital‑asset rulemaking with efforts to internationalize the won and deepen FX market liquidity. The authors caution that if corporate and foreign access to local crypto venues is widened before FX liquidity and won internationalization increase, dollar demand that currently appears as a stablecoin premium could shift into the official FX market.

The paper identifies indicators to monitor: whether Korean exchanges permit corporate and foreign trading, whether a KRW–dollar stablecoin pair appears on major global platforms, and whether won‑internationalization efforts broaden the set of FX market participants. The PDF states the findings reflect the authors’ views and not the official position of the Bank of Korea.