South Korea’s restrictions on virtual-asset trading are widening the Kimchi Premium for dollar stablecoins while limiting the channel through which crypto-market shocks reach the foreign-exchange market, Bank of Korea researchers said September 3. Kim Ji-hyun and Jo Sang-heum of the BOK’s International Financial Research Team examined links between currencies and stablecoins, including whether local currencies can be used to trade stablecoins directly on Binance. Argentina, Brazil, Europe’s euro and the UK permit those transactions, while South Korea and Japan prohibit transfers of local currency to overseas exchanges such as Binance for trading. In markets with direct access, temporary stablecoin price deviations quickly converged toward one coin equaling one dollar. South Korea’s dollar stablecoin exchange rate deviated about 1.67% from the underlying exchange rate, the highest among 30 surveyed countries excluding four countries including India and Ukraine. Earlier BOK analysis found a median won-denominated USDT premium of 1.67% since 2022, compared with roughly 0.8% across 30 comparison currencies. The research found that opening access to corporations, foreigners and global intermediaries could narrow local premiums but strengthen links with foreign-exchange markets. In Brazil, a one-standard-deviation increase in Google Bitcoin search volume widened the stablecoin premium by 0.11 percentage points and weakened the real by 0.12%; in South Korea, the same shock widened the Tether premium by 0.85 percentage points without a clear exchange-rate response. The BOK recommended coordinating digital-asset regulation, won internationalization and foreign-exchange reforms, while cautioning that South Korea lacks sufficient data to estimate the eventual exchange-rate effect of market opening.