Same coin, 12,400x the volume: Why stablecoin liquidity dwarfs domestic exchanges

The stablecoin liquidity gap between domestic and overseas exchanges has widened to as much as 10,000 times, with concerns growing that South Korean platforms could lose their competitive edge as foreign rivals deploy stablecoins far beyond simple spot trading.

Data from Upbit Data Lab showed that as of 12:07 p.m. Sunday, Tether's 24-hour trading volume on the exchange stood at 43 billion won ($31.6 million), while USD Coin recorded 1.28 billion won over the same period. On Coinbase, the largest digital asset exchange in the United States, USDT changed hands at $44.86 million and USDC at $13.46 million during the same window.

The gap is even more pronounced for stablecoins beyond USDC and USDT. World Liberty Financial USD (USD1) posted just 58.27 million won in 24-hour volume on Upbit, while Binance — the world's top exchange by liquidity — recorded $531.9 million, roughly 12,400 times Upbit's figure.

Ripple USD (RLUSD) saw $129.56 million in 24-hour volume, about 2,100 times Upbit's 83.59 million won. USDe traded $35.23 million on Binance, approximately 3,300 times more than the 14.82 million won recorded on Upbit.

Analysts attribute the liquidity disparity to the way overseas exchanges treat stablecoins not merely as intermediary assets but as core platform instruments. Foreign platforms use stablecoins as base currencies across a wide range of trading pairs while layering on deposit rewards, lending and collateral services to keep users engaged within their ecosystems.

Coinbase, for instance, offers users who hold USDC on its platform an annual reward of 3.60 percent. Kraken similarly provides annual returns of 1.75 to 4.50 percent on USDC, Global Dollar (USDG) and RLUSD through its stablecoin rewards program — a yield comparable to fixed-deposit rates at South Korean commercial banks, even without lending out the deposited assets.

Binance is offering up to 7 percent annual percentage rate on its USDC flexible product throughout September, distributed through its Simple Earn service. Simple Earn lets users deposit digital assets into flexible or fixed-term products in exchange for rewards. Binance says it may use deposited assets for on-chain staking or crypto-backed lending.

Collaboration between issuers and exchanges is also expanding globally. On Tuesday, Binance invested $100 million in Circle, the issuer of USDC, and extended their strategic partnership by five years. Under the arrangement, Binance will broaden USDC usage across its global platform while Circle provides the infrastructure to support holding and using the coin.

Stablecoins also serve as settlement instruments for tokenized stocks, ETFs and perpetual futures. According to CoinGlass, digital asset derivatives volume in the first half of this year reached $35.08 trillion, averaging $193.8 billion per day. On Kraken's tokenized stock service xStocks, the Nvidia tokenized share NVDAx recorded trading volume of $90.16 million on Friday (local time).

Domestic exchanges, by contrast, have little room to expand stablecoin use beyond listing and brokering spot trades. The institutional investment market that could deepen liquidity has yet to open. Industry insiders say the widening gap in business scope could erode the long-term competitiveness of South Korean exchanges.

"Overseas, stablecoins are expanding into a wide range of financial services — payments, deposits, lending — but here in Korea we can only do spot trading," one digital asset industry official said. "So many of the measures that could activate the market fall under regulatory jurisdiction, and that leaves customers with no choice but to go abroad where there are more investment products on offer."