Dollar-backed stablecoins can push local currencies lower, Bank of Korea study finds - CoinDesk

The Bank of Korea’s recent study adds a critical, official voice to the debate over dollar-pegged stablecoins in emerging markets. The central bank’s researchers concluded that widespread adoption of these digital assets can exert downward pressure on local currencies. The mechanism is straightforward: when domestic investors convert won into stablecoins like USDT or USDC, they effectively swap local liquidity for dollar-denominated claims, bypassing traditional capital controls and reducing demand for the home currency.

This finding is particularly relevant for financial markets because it challenges the view of stablecoins as a purely neutral bridge between crypto and fiat. For central banks in Asia and beyond, the study underscores a growing policy dilemma—how to manage the benefits of fast, low-cost settlement against the risk of currency substitution. Market participants should watch for tighter regulatory responses, such as stricter reporting requirements for crypto exchanges or limits on stablecoin-to-won conversions. The Bank of Korea’s stance signals that authorities are no longer treating these assets as peripheral, but as a measurable factor in monetary stability. The key indicator to monitor will be any shift in on-chain volume data for dollar-pegged tokens relative to local trading pairs, which could foreshadow official intervention.