Binance Stablecoin Pairs Fuel Currency Depreciation
The Bank of Korea has published a study on the linkages between stablecoin-fiat currency trading pairs and foreign exchange markets. The study, conducted by Kim Jihyun and Cho Sangheum, found that direct fiat-to-stablecoin trading pairs on Binance create a channel for dollar-pegged stablecoins to flow into FX markets.
The researchers identified a two-step mechanism: local investors buy stablecoins directly from Binance, while global market makers supply the tokens. These intermediaries then have an incentive to sell the local currency and buy dollars in the FX market to balance their positions.
The study analyzed data from 2019 to 2025 and found that after Binance listed a fiat-stablecoin pair, local stablecoin premiums fell by roughly 0.33 percentage points. Additionally, higher premiums were associated with significant depreciation of the paired currency.