Kim Ji-hyun and Cho Sang-heum of the BOK's International Finance Research Team said in an Issue Note that the presence of global intermediaries can determine how closely stablecoin markets are linked with traditional FX markets.
The researchers said regulatory changes that broaden participation by corporations and foreign investors could allow demand shocks in dollar stablecoins to trigger FX transactions and affect exchange rates more directly.
Dollar stablecoins track the U.S. dollar, so buying them with a non-dollar currency such as the Korean won is economically similar to using that currency to purchase a dollar-denominated asset.
Whether such demand translates into actual FX transactions, however, depends heavily on how the stablecoin market is structured.
The researchers used the start of direct trading between selected fiat currencies and dollar stablecoins on Binance as an event marking the entry of global intermediaries into those markets.
When direct fiat-stablecoin trading is available, professional market makers can supply stablecoins in exchange for local currency. They can then sell that currency for dollars in the FX market to manage the resulting currency mismatch.
The study divided the linkage into two channels. Price integration occurs when stablecoin prices converge toward spot exchange rates, while shock transmission occurs when stablecoin demand generates FX transactions and affects exchange rates.
An analysis of 12 currencies, including the euro, Turkish lira and South African rand, from 2019 through 2025 showed that direct Binance trading reduced dollar stablecoin premiums by about 0.33 to 0.38 percentage points.
The researchers also found that stablecoins flowed from Binance into local markets when premiums on local exchanges rose above those on Binance.
They said the pattern showed that access to global liquidity helped narrow pricing gaps.
Greater price integration came alongside stronger transmission of stablecoin demand into foreign-exchange markets.
Before direct trading was introduced, the relationship between dollar stablecoin premiums and movements in the corresponding currency against the dollar was not statistically meaningful.
After trading support began, higher stablecoin premiums were associated with depreciation of the local currency, according to the study.
A comparison between Korea and Brazil illustrated the difference.
In Korea, a one-standard-deviation increase in Google searches for Bitcoin, used as a proxy for crypto investment demand, raised the dollar stablecoin premium by about 0.85 percentage point. The effect on the won-dollar exchange rate was not statistically meaningful.
In Brazil, where direct trading between the real and dollar stablecoins was available on Binance, the same shock raised the stablecoin premium by about 0.11 percentage point.
The real weakened by about 0.12 percent against the dollar, showing a clearer transmission into the FX market.
Korea currently has a different market structure because Binance does not support direct won-dollar stablecoin trading and corporate and foreign participation in the domestic crypto market remains restricted.
Those restrictions limit the role of global intermediaries that can access both stablecoin and FX markets. As a result, stablecoin demand pressures in Korea tend to be absorbed more through local crypto prices than through the exchange rate, the researchers said.
The median premium on won-denominated dollar stablecoins since 2022 stood at 1.67 percent despite Korea's relatively high degree of capital-market openness.
That was close to 1.86 percent in Ukraine and 1.80 percent in South Africa, where capital controls are considerably stronger.
The researchers said broader participation in Korea's crypto market could strengthen the link between dollar stablecoins and the FX market.
They called for digital-asset regulation to be considered alongside efforts to internationalize the won and deepen the country's FX market, saying greater participation and liquidity could improve the market's capacity to absorb shocks.
AJP Takeaways
Wider corporate and foreign participation in Korea's crypto market could strengthen the transmission of dollar stablecoin demand into FX trading and the won.
Direct fiat-stablecoin trading on Binance reduced stablecoin premiums by 0.33 to 0.38 percentage points while strengthening transmission into exchange rates.
The researchers said digital-asset reforms should be considered together with won internationalization and deeper FX liquidity.
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