Bank of Korea Flags Dollar Pressure
A recent study from the Bank of Korea has highlighted a growing concern: dollar-backed stablecoins, such as those commonly traded on platforms like Binance, can exert downward pressure on local currencies. The research found that when traders buy stablecoins paired with the dollar, it often correlates with depreciation in their home currency. This dynamic emerges because market makers—entities that provide liquidity—must adjust their positions in response to buying surges, amplifying the effect on foreign exchange rates.
The findings point to a tangible link between stablecoin activity and currency volatility, especially in emerging markets where local units may already be vulnerable. For example, if demand spikes for USDC or USDT against a regional currency, the local unit can weaken further as liquidity providers rebalance their holdings. Coindesk.com reports that this phenomenon is not just theoretical but observable in real-world trading data.
Real Stablecoin Payments Remain Minuscule
Despite headlines touting trillions in annual stablecoin "volume," the reality of genuine payments is far more modest. According to late 2025 estimates from McKinsey and Artemis, actual stablecoin payments—transactions used for goods, services, or cross-border remittances—were running at an annualized rate of roughly $390 billion. In contrast, the global cross-border payments market hit $208 trillion for 2025, based on FXC Intelligence data.
This means that real stablecoin payments account for just about 0.02% of all payment volume worldwide when combining both domestic and international flows. The vast majority of reported activity—often cited as $30 trillion or more per year—is dominated by bots, exchange arbitrage, and automated trading rather than day-to-day commerce.
The scale of actual stablecoin use in payments remains tiny compared to traditional financial rails.
Banks Still Hold the Stablecoin Keys
While crypto-native firms have pushed stablecoins into the spotlight, traditional banks continue to play a pivotal role in determining whether these digital dollars can scale up. Stripe's $1.1 billion acquisition of Bridge—a company specializing in orchestrating bank relationships—underscores how essential established financial institutions remain for settlement and compliance infrastructure.
Meanwhile, global banking giants are testing the waters: Citi is rolling out crypto custody services and Standard Chartered is piloting stablecoin settlement in Singapore. Yet even with these moves, the gap between crypto volume and mainstream adoption persists. For comparison, Brazil's Pix instant payment system processed over R$35 trillion ($6.3 trillion) in 2025 alone, with nearly half of that value coming from business-to-business transactions—a figure that dwarfs all legitimate stablecoin payment flows combined.
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Fed Weighs Stablecoins in Money Supply
Adding another layer of complexity, a Federal Reserve staff note published on September 4 examined how regulated payment stablecoins might fit into official U.S. money supply measures such as M1 and M2. Currently, these digital assets are excluded from monetary aggregates—even though permitted reserves under legislation like the GENIUS Act must be held 1:1 against outstanding tokens and disclosed monthly.
The Fed note warns of a potential "same-dollar problem": if a stablecoin issuer holds its reserves in assets already counted within M1 or M2 (such as cash at banks or government money market funds), then those same dollars could end up being counted twice if stablecoins themselves are also included. Circle's USDC reserve structure illustrates this challenge; most reserves sit within an SEC-regulated government money market fund or are held as Treasuries and bank deposits—all instruments central to existing money supply measures.
Why It Matters
Stablecoins promise faster settlements and borderless transactions but also introduce new risks for both monetary policy and financial stability. The Bank of Korea's findings suggest that increased adoption could amplify currency volatility in smaller economies by linking them more tightly to U.S. dollar flows—potentially undermining local policy tools.
At the same time, regulatory questions loom large: U.S. authorities are still debating how—or even whether—to count stablecoins within official monetary statistics without distorting measures like M1 or M2 through double-counting. Meanwhile, despite splashy deals like Stripe's $1.1 billion Bridge purchase and experiments by Citi and Standard Chartered, real-world usage remains limited: just $390 billion annualized in actual payments versus trillions moved through systems like Pix each year.
There is a clear tension between headline figures suggesting explosive growth and concrete numbers showing that practical adoption is still nascent.
What deserves close attention
If the Federal Reserve moves to include regulated payment stablecoins in M1 or M2 following its September 4 staff note, immediate implications could arise for reported US money supply figures due to the unresolved "same-dollar problem" of potential double-counting, but whether and when such inclusion will occur remains unclear.
