South Korea’s Financial Services Commission (FSC) is reviewing whether to introduce a formal market-making framework for digital assets after a yen-pegged stablecoin briefly traded at more than four times its intended value on Upbit.
JPYC, a stablecoin designed to track the Japanese yen, began trading on Upbit on September 17. It opened at 12 Korean won per token and climbed to 37.6 won within about an hour, a level roughly 324% above the corresponding won-yen exchange rate, according to local reports. The move was attributed to limited resting liquidity on the order book rather than any change in JPYC’s underlying yen backing.
At a conference in Seoul on September 28, FSC Digital Finance Policy Director Yoo Young-joon said the agency would examine market-making as part of South Korea’s second-stage crypto legislation. “We will also review the need to introduce systems such as market-making activities to increase the efficiency and stability of the digital asset landscape,” Yoo said. He added that user losses following the post-listing price surge had drawn criticism and that “demands for discipline in this area are expanding.”
Currently, South Korea’s Virtual Asset User Protection Act contains no exemption for market-making from its market-manipulation provisions. That effectively blocks firms from providing continuous two-sided liquidity, which Yoo’s remarks suggest the FSC may be reconsidering. The regulator is also reviewing broader reforms covering exchange licensing, public oversight, disclosures, domestic token issuance and won-based stablecoins.
Academic and industry researchers have previously argued for change. A 2024 Seoul Law Review paper by KB Securities researcher Lee Min Jung suggested a market-making carve-out could be considered as the market matures, while a Korbit Research Center paper by Yoonyoung Choi linked the absence of a formal market-maker system to structural liquidity problems, including the persistent Kimchi premium.
Any market-making framework would still depend on future legislation and detailed rules, meaning the proposal remains under consideration rather than approved or operational. The key question is whether regulators can design safeguards that separate legitimate liquidity provision from manipulative activity.
