A new working paper from the Bank for International Settlements and the International Monetary Fund provides the first causal evidence that stablecoin activity is spilling over into traditional foreign exchange (FX) markets. The effects include depreciating local currencies and raising the cost of dollar funding for banks and corporates that have never touched crypto.
The paper uses daily data on four major USD pegged stablecoins traded against 27 fiat currencies across 64 centralized exchanges from January 2021 to November 2025.
The starting observation is simple but consequential. More than 70 percent of cumulative net inflows into stablecoins come from non USD currencies. When someone in Turkey or Brazil buys USDT with lira or reais, they are performing a foreign exchange transaction, selling local currency and acquiring dollar exposure. At scale, this creates what the researchers call a parallel, stablecoin based FX ecosystem.
The question is whether this parallel market stays self contained or leaks into the traditional financial system. The answer, convincingly demonstrated in this paper, is that it leaks.
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