Stablecoin Pressure On Local Currencies Is Real, BOK Finds
Dollar-backed stablecoins such as Tether ($USDT) can push down the value of emerging-market currencies, according to a Bank of Korea (BOK) study published in 2026. The research, which analyzed trading data from Binance, found a clear pattern: when traders pile into stablecoin pairs against local currencies, those currencies tend to weaken.
The mechanism is straightforward. Market makers on exchanges like Binance often hold inventories of stablecoins and local currencies to facilitate trades. When demand for stablecoins surges—say, as a safe haven during market stress—these market makers must rebalance their positions. That rebalancing often means selling the local currency, putting downward pressure on its exchange rate.
How Binance Trading Data Reveals The Depreciation Link
The BOK study zeroed in on Binance-paired currencies, which include stablecoin trading pairs for the Korean won, Brazilian real, and Turkish lira, among others. The researchers correlated buying pressure in these pairs with subsequent depreciation of the local currency. The correlation held even after controlling for other factors like interest rate differentials and capital flows.
Specifically, the study found that for every 1% increase in net buying pressure for stablecoins against a local currency, that currency depreciated by roughly 0.2% over the following weeks. While that may sound small, it compounds over time. For countries with already fragile currencies, sustained stablecoin outflows could exacerbate inflationary pressures and complicate monetary policy.
The Bank of Korea’s interest is not academic. South Korea is one of the world’s most active crypto markets, with the won frequently trading against Tether and USD Coin ($USDC) on global exchanges. The BOK has been monitoring digital assets for years, and this study adds to growing concerns that stablecoins could undermine financial stability in emerging economies.
Why Market Makers Amplify The Stablecoin Effect
The study highlights the role of market makers as amplifiers. When demand for stablecoins spikes, market makers on Binance must adjust their inventory. They typically do this by selling the local currency they hold and buying more stablecoins, which adds selling pressure to the forex market. Conversely, when stablecoin demand falls, they may buy back local currencies, providing some support.
This dynamic is especially pronounced in thin markets. Currencies like the Argentine peso or Nigerian naira have limited liquidity, so even moderate stablecoin flows can move the exchange rate noticeably. The BOK’s data shows that the effect is stronger for smaller currencies, confirming that liquidity is a key factor.
Regulators have taken notice. In 2025, the Financial Stability Board (FSB) called for global standards on stablecoin oversight, and the Bank for International Settlements (BIS) has warned about the risks of stablecoins to emerging markets. The BOK’s study provides empirical evidence that supports those warnings.
Market Context: Stablecoin Supply At Record Highs
The stablecoin market has grown dramatically in recent years. As of August 2026, the total market capitalization of dollar-pegged stablecoins exceeded $230 billion, up from about $160 billion in early 2025. Tether alone accounts for roughly 70% of that supply, with USDC and other issuers making up the rest.
This growth has been fueled by demand for crypto trading, remittances, and as a hedge against local currency volatility. But the BOK study suggests that the very feature that makes stablecoins attractive—their dollar peg—can become a channel for currency substitution that destabilizes local monetary systems.
Bitcoin ($BTC) and other cryptocurrencies are often used as the base asset for stablecoin trades, which means that crypto market swings can indirectly affect forex markets. For example, when Bitcoin prices drop sharply, traders often rotate into stablecoins, which can trigger the same depreciation dynamic.
What To Watch: BOK Policy Response And Stablecoin Regulations
The Bank of Korea has not yet proposed specific rules based on this study, but it is likely to influence future policy discussions. South Korea has been tightening its crypto regulations since the 2021 implementation of the Special Financial Transactions Act, and this new evidence could push for stricter oversight of stablecoin trading pairs.
Investors and policymakers should watch for two things. First, whether the BOK introduces measures to monitor or limit stablecoin flows on local exchanges. Second, whether other emerging-market central banks follow suit—particularly in countries where crypto adoption is high, such as Brazil, Turkey, and Nigeria.
The key number to track is the net stablecoin buying pressure on Binance for won and other emerging-market currencies. If that pressure continues to rise, expect further depreciation pressures. Conversely, if regulators succeed in curbing speculative demand, the effect may fade. The next BOK monetary policy meeting is scheduled for October 2026, and any commentary on stablecoins there could signal a shift.
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