Stablecoins trade above won-dollar exchange rate amid renewed US-China trade tensions
An illustration of a Bitcoin imitation and a trading chart / AFP-Yonhap
Dollar-pegged stablecoins are trading at a significant premium on Korean cryptocurrency exchanges, with prices roughly 5 percent above the official won–dollar rate, as renewed U.S.–China trade tensions roil markets, industry officials said Tuesday.
At Upbit, Tether's USDT traded at around 1,490 won ($1.04) on Tuesday, following trades near 1,500 won the previous day. This was about 5 percent higher than the won–dollar exchange rate, which hovered at around 1,420 for the second consecutive day.
Its price spiked as high as 1,655 won on Friday, following heightened concerns over escalating U.S.–China trade tensions. This marks the first time the token breached 1,650 won during trading hours since its Upbit debut in May.
Circle's USDC, the no. 2 dollar-backed stablecoin, mirrored the trend, peaking at 1,647 won on Friday before retreating to 1,490 won by Tuesday — still above the official exchange rate.
Smaller stablecoins saw wilder swings, with World Liberty Financial's USD1 briefly surging to 10,000 won on Friday before easing to around 1,500 won by Tuesday.
"A surge of buy orders hit the market all at once when sell-side liquidity was thin, leading to rapid market-price executions," an industry official said.
The price gaps come as Korea moves to strengthen oversight of stablecoins, sparking renewed debate over their stability. Stablecoins, designed to maintain parity with fiat currencies, are typically less volatile than other crypto assets.
Yet the divergence underscores the return of the so-called "kimchi premium," market watchers say.
"Korean investors are barred by foreign exchange rules from depositing won directly on overseas trading platforms," said Kim Byoung-joon, an analyst at DeSpread. "The restriction has fueled imbalances in the local crypto market, where limited supply and strong demand often drive digital-asset prices above those seen abroad."
According to Kim Min-seung, head of research at the Korbit Research Center, the premium on Tether and Circle currently hovers at around 5 percent, roughly in line with that seen in Bitcoin and Ethereum.
The Chuseok holiday, which closed Korea's foreign-exchange market for about a week, added to the pressure. When the market is open and provides a benchmark rate, speculative demand rarely pushes stablecoin prices far from that level.
The imbalance was compounded by the surging appetite of Korean investors for overseas crypto futures. Friday's sharp crypto selloff, which erased more than $19 billion in leveraged positions globally, stoked demand for dollar-pegged stablecoins as traders rushed to shore up margin accounts on foreign platforms or move funds offshore.
"The wave of liquidations was even larger than those seen during the COVID-19 market crash or the collapse of FTX," said Yang Hyun-kyung, a researcher at iM Securities.