South Korean crypto exchanges saw a sharp 62% jump in stablecoin trading as the won slid to multi-year lows against the U.S. dollar, pushing investors toward dollar-pegged tokens as a hedge against currency weakness.
According to The Korea Times, trading volume in Tether (USDT) across the country’s five major won-based exchanges surged to 378.2 billion won ($261 million) last Wednesday, when the exchange rate briefly moved past 1,480 won per dollar, citing data from CryptoQuant.
The spike came as pressure on the won intensified. The currency fell for nine straight sessions against the dollar, marking its longest losing streak since 2008, according to Bloomberg.
As demand surged, major exchanges — including Upbit, Bithumb, Korbit, and Coinone — ramped up marketing around stablecoins such as USDT, USDC, and USDe. Platforms waived trading fees and rolled out rewards to capture volume during what industry insiders described as a broader slowdown in crypto trading activity.
Banks Cut Dollar Rates as Authorities Step In
At the same time, South Korea’s major banks moved quickly to discourage dollar hoarding. The Chosun Daily reported that commercial banks slashed interest rates on dollar deposits to near zero following government pressure to help stabilize the exchange rate.
Shinhan Bank cut its annual dollar deposit rate from 1.5% to 0.1% starting January 30, while Hana Bank lowered rates from 2% to just 0.05% on its Travelog Foreign Currency Account.
These cuts followed a closed-door meeting in which authorities urged banks to dial back aggressive marketing of dollar deposits. In response, banks shifted incentives toward the won. Shinhan, for example, offered a 90% preferential exchange rate for customers converting dollar deposits back into won, along with a bonus rate for rolling funds into won-denominated term deposits.
The impact was immediate. Dollar deposit balances at South Korea’s five largest banks fell 3.8% to $63.25 billion as of January 22 — the first decline after three straight months of growth.
Corporate deposits, which make up roughly 80% of total dollar holdings, dropped sharply from $52.42 billion at year-end to $49.83 billion, suggesting companies were selling dollars as confidence grew that the exchange rate had peaked.
Retail dollar deposits still rose, but at a much slower pace — increasing by just $109.6 million, compared with a $1.09 billion jump the month before.
Presidential Comments Help Calm the Market
Pressure on the won eased further after President Lee Jae-myung made a rare public intervention on currency markets. Speaking at a January 21 press conference, Lee said authorities expected the exchange rate to fall toward 1,400 won per dollar within one to two months.
Markets reacted immediately. The won strengthened from 1,481.4 to 1,467.7 per dollar, later settling near 1,471.3.
Analysts noted how unusual it was for a sitting president to specify both a target level and timeline, with Lee’s remarks carrying more weight than earlier comments from U.S. Treasury Secretary Scott Bessent, who had described the won’s weakness as “inconsistent with Korea’s strong fundamentals.”
Currency data suggests sentiment is already shifting. From January 1–22, average daily won-to-dollar conversions slowed to $16.5 million, while dollar-to-won conversions jumped to $5.2 million per day, well above last year’s average — a sign of growing profit-taking.
Economic Headwinds Add to the Pressure
The currency stress comes amid broader economic softness. CNBC reported that South Korea’s Q4 GDP growth slowed to 1.5% year over year, missing forecasts of 1.9%. Construction investment fell 3.9%, while exports declined 2.1% from the previous quarter.
The won is now down nearly 2% against the dollar this year, making it one of Asia’s weakest-performing currencies. Meanwhile, South Korean retail investors have continued moving capital overseas, buying roughly $2.4 billion in U.S. equities through mid-January — about 60% more than the same period last year.
Crypto Reform Moves Ahead Despite Market Volatility
Despite the economic headwinds, South Korea is pressing forward with major crypto policy changes. Earlier this month, regulators lifted a nine-year ban on corporate crypto trading, allowing listed companies to invest up to 5% of equity capital in top-20 cryptocurrencies.
Lawmakers have also passed amendments to the Capital Markets Act and Electronic Securities Act, laying the groundwork for tokenized securities trading starting in January 2027.
Korea Exchange Chairman Jeong Eun-bo has pledged to push for spot Bitcoin ETFs and 24/7 trading hours as part of efforts to reduce the so-called “Korea discount,” though comprehensive digital asset legislation remains stalled amid ongoing political and regulatory disputes.
