- Price swing in JPYC (a yen-pegged stablecoin) revealed liquidity gaps on local exchanges.
- JPYC’s Upbit listing surged past its peg, hitting four times its actual value.
- FSC Director of Digital Finance Policy says regulators will explore market-making rules.
South Korea’s FSC is looking at setting up an official market-making framework for digital assets after a big price swing in JPYC (a yen-pegged stablecoin) revealed liquidity gaps on local exchanges.
On September 28, FSC Director of Digital Finance Policy Yoo Young-jun said the regulator will look into whether things like market-making are needed to make crypto markets more efficient and stable. His comments don’t mean crypto market makers are being legalized right away, as the framework is still being considered.
The trigger for this was JPYC’s listing on Upbit on September 17. JPYC is meant to stay pegged to one Japanese yen, which, at the time, was worth about 8.8 South Korean won.
However, not long after trading began, JPYC jumped from an opening price of 12 won to as high as 37.6 won, briefly putting it at over four times what it was actually worth.
The whole thing seems to have been caused by thin liquidity and not by any real change in JPYC’s value. Since JPYC is meant to be redeemed at one yen, the wild Upbit price was likely a reflection of the Korean won market, rather than the stablecoin suddenly being worth four times as much back in Japan.
A Bigger Regulatory Effort
Market makers keep buy and sell orders flowing at all times, which helps narrow the gap between prices and smooth out imbalances between buyers and sellers.
South Korea has kept tight limits on crypto market-making under its Virtual Asset User Protection Act, worried it could open the door to market manipulation. Now, the FSC is looking at whether formal rules could separate honest liquidity providers from abusive trading practices.
Not surprisingly, the market-making idea is just one piece of a much bigger regulatory effort. South Korea is drafting its Digital Asset Basic Act, and a parliamentary subcommittee review is expected in November.
The legislation is intended to cover areas such as digital asset issuance, distribution, disclosure obligations, and business operator requirements, with stablecoins remaining a central concern.
FSC is also getting ready for South Korea’s tokenization push. A roadmap released in September says the first stage of security token infrastructure will kick off in February 2027, eventually building toward on-chain payment systems tied to stablecoins.
Related: South Korea Plans Three-Phase Tokenized Asset Rollout Starting 2027
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