The South Korean Financial Services Commission is evaluating the potential introduction of a formal market-making system for digital assets. This move follows a significant price spike of the JPYC stablecoin on the Upbit exchange earlier this month, where the asset traded at four times its peg.
Upbit launched JPYC trading on September 17. The price opened at ₩12 and surged to a high of ₩37.6 within an hour. Officials attributed this volatility to limited liquidity on the platform. Yoo Young-joon, director of digital finance policy at the FSC, stated that the regulator is reviewing market-making activities to improve market stability and efficiency.
Currently, South Korea’s Virtual Asset User Protection Act does not exempt market-making from market manipulation provisions, which effectively restricts liquidity providers. Previous research from the Korbit Research Center highlighted that the absence of a formal system has led to persistent liquidity issues, price discrepancies, and high volatility in the local market.
The discussion occurs as South Korea develops a comprehensive Digital Asset Basic Act. While the FSC announced plans in July to regulate stablecoins and exchange operations, lawmakers have not yet finalized key aspects of the legislation, including specific rules for issuers of won-denominated stablecoins.
