South Korea’s FSC weighs legalizing crypto market makers after JPYC spiked on Upbit
South Korea’s Financial Services Commission is reviewing whether to allow a market-making system for digital assets, after the yen stablecoin JPYC traded at a multiple of its peg on Upbit earlier this month.
Financial Services Commission digital finance policy director Yoo Young-joon said, “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 at the Seoul conference. He acknowledged criticism that user losses followed the price surge after the JPYC listing and said demands for discipline in the area are expanding.
Upbit opened trading in JPYC, a stablecoin pegged to the Japanese yen, on September 17, reportedly the first yen-pegged token to get a direct Korean won pair in the country. The market opened at roughly 12 Korean won per JPYC and reached a high of 37.6 won within hours, with the spike attributed to limited liquidity on the exchange. Upbit reportedly handled more than 54% of global JPYC spot volume shortly after launch, and trading there topped 2.4 trillion won in the initial hours.
South Korea’s Virtual Asset User Protection Act treats market-making as potential market manipulation and contains no exemption for it, so no professional liquidity providers could step in to pull the price back toward the peg. Data presented to South Korean lawmakers showed more than 21,219 investors bought JPYC at premiums above 10% of the reference rate, spending roughly 260 billion won, and that 3,792 of them still held positions with unrealized losses approaching 5 billion won as of September 21.
Any change is likely to arrive through the Digital Asset Basic Act, the consolidated crypto legislation the FSC said in July it planned to introduce, covering stablecoins, exchanges, disclosures and internal controls. Lawmakers have not yet settled key aspects of the bill, including rules for won-denominated stablecoin issuers.
