Stablecoin Demand May Pressure Local Currencies

A Bank of Korea study found that stablecoin demand can pressure local currencies when exchanges offer direct fiat-to-USD stablecoin trading pairs. The research shows that market infrastructure, rather than stablecoin adoption alone, determines whether demand remains a crypto-market premium or becomes foreign-exchange pressure. After direct fiat pairs were introduced, stablecoin premia fell by about 0.33 to 0.38 percentage points as arbitrage and liquidity improved. However, market makers selling stablecoins for local currency may later sell that currency and buy dollars to hedge, creating depreciation pressure. South Korea’s won showed no statistically significant exchange-rate impact during the study period because Binance lacked a direct won-to-USD stablecoin pair. Korean demand instead appeared mainly through higher stablecoin premia. A separate Bank for International Settlements study found that a 1% increase in net stablecoin inflows was linked to roughly 40 basis points of greater stablecoin-FX parity deviation and about 5 basis points of local-currency depreciation. More than 70% of cumulative net inflows from 2021 to 2025 came from non-USD currencies. For crypto traders, fiat on-ramps, exchange access, stablecoin liquidity and regional premiums are key indicators. Direct trading pairs may reduce price gaps while increasing links between stablecoin flows, foreign exchange markets and emerging-market volatility. The findings do not show that stablecoins always weaken national currencies, but they point to rising regulatory and FX risks as adoption expands.