South Korean regulators are taking a fresh look at how liquidity is supplied in crypto markets, prompted by a wild debut for a yen-linked stablecoin on the country’s largest exchange. The Financial Services Commission (FSC) said it is considering a market-making system for digital assets.
The trigger was JPYC, a stablecoin backed by the Japanese yen. Upbit opened trading in the token on September 17 at 12 Korean won. Within an hour, the price had climbed to 37.6 won, more than four times its market value. The spike was attributed to limited liquidity on the platform.
Another stablecoin saw sharp swings the same day. Upbit’s data shows PYUSD reached an all-time high of 1,760 won on Sept. 17 before falling toward the 1,360-won area.
Yoo Young-joon, director of digital finance policy at the FSC, addressed the episode at a conference in Seoul on Monday, as per local media reports. “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,” he said. He added: “There were also criticisms that user losses occurred from the price surge after the JPYC listing, so demands for discipline in this area are expanding.”
The Virtual Asset User Protection Act, South Korea’s current law, offers no exemption for market-making from its market manipulation provisions. This gap has kept market makers from providing liquidity in crypto markets, and Yoo’s comments suggest the FSC may be rethinking the arrangement.
Such proposals arrive while the country builds its second-stage digital asset legislation, which is expected to cover stablecoin issuance and circulation. The FSC said in July that it planned to introduce a consolidated Digital Asset Basic Act. The framework would span stablecoins and the wider crypto market, including rules for digital asset businesses, exchanges, disclosures and internal controls.
