South Korea’s Financial Services Commission is considering a regulated market-making system for digital assets after severe pricing dislocations exposed weaknesses in domestic crypto liquidity.
JPYC, a Japanese yen-backed stablecoin, began trading on Upbit on September 17. The token opened at 12 Korean won and reached 37.6 won within approximately one hour, more than four times its underlying currency value. Limited local liquidity was identified as the principal cause.
Yoo Young-joon, the FSC’s director of digital finance policy, said Monday that the regulator would examine whether market-making activity could improve market efficiency and stability. His remarks were reported by Digital Asset in South Korea and summarized by Cointelegraph. 디지털애셋 (Digital Asset)
South Korea’s Virtual Asset User Protection Act does not provide an exemption for legitimate market making. Continuous two-sided quoting can therefore risk being treated as prohibited price manipulation, discouraging firms from supplying liquidity.
The FSC is considering the issue as part of a wider Digital Asset Basic Act. Other possible changes include licensing and registration requirements, public regulation of exchange functions, domestic token issuance rules, disclosure standards and a framework for won-denominated stablecoins.
TOKEN RECON ASSESSMENT
The JPYC spike demonstrates that strict anti-manipulation rules can produce a different market-integrity problem when they leave order books too thin to absorb demand.
A market-maker exemption would need defined quoting obligations, position limits, conflict controls and surveillance. Without those safeguards, South Korea could replace one source of distorted pricing with another. The next confirmation point is draft legislation, not the regulator’s statement of intent.
Sources
Digital Asset: FSC considers a digital-asset market-making system
Cointelegraph: South Korea weighs market makers after JPYC price spike
