South Korea Weighs Crypto Market Makers After JPYC Price Surge
A token engineered to trace a single foreign money moved 4 occasions its meant worth in about an hour. That hole between design and value is now forcing South Korea prime monetary regulator to confront a query it has prevented for years on crypto markets.
JPYC, a stablecoin designed to trace the Japanese yen, started buying and selling on Upbit on September 17. The market opened at 12 Korean gained per token and climbed to a high of 37.6 gained an hour later, or greater than 4 occasions its estimated yen-linked market worth.
That will not be how a stablecoin is meant to behave. The complete premise of the asset class is that the worth tracks a reference worth tightly sufficient that merchants don’t want to consider it. Why the spike? The transfer to restricted liquidity on Upbit somewhat than any change in JPYC’s underlying yen backing.
A reference peg is a promise about redemption worth, not a assure that each alternate order e book will value the token appropriately at each second. When there isn’t sufficient resting liquidity on both facet of the e book, a handful of aggressive purchase orders can push the traded value removed from the place arbitrage would usually pull it again.
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The Policy Problem and The Price Spike
South Korea Financial Services Commission is now reviewing whether or not to introduce a proper market-making system for crypto in response to the episode. Yoo Young-joon, director of digital finance coverage on the FSC, stated the company would study the difficulty at a convention in Seoul.
“We may also assessment the necessity to introduce methods similar to market-making actions to extend the effectivity and stability of the digital asset panorama,” Yoo stated. He added that criticism had emerged over consumer losses tied to the post-listing value surge, and that “calls for for self-discipline on this space are increasing.”
The regulatory bind is structural. South Korea’s Virtual Asset User Protection Act presently incorporates no exemption for market-making from its market-manipulation provisions, which successfully blocks companies from offering steady two-sided liquidity the way in which automated market makers do on other venues. Yoo’s feedback counsel the FSC could also be reconsidering that stance.
SOUTH KOREA EYES SHIFT
South Korea considers lifting crypto market-making ban to spice up market liquidity and stability. pic.twitter.com/GfvDAfSPq2
— cryptothedoggy (@cryptothedoggy) September 28, 2026
This isn’t a brand new debate. A 2024 peer-reviewed paper in Seoul Law Review, authored by KB Securities researcher Lee Min Jung, argued that regulators had beforehand disallowed crypto market-making over manipulation considerations, however advised a carve-out may very well be thought of as soon as the market matured.
Separately, a paper by Yoonyoung Choi on the Korbit Research Center argued that the absence of a proper market-maker system had produced severe liquidity issues in Korea’s home crypto market, citing the persistent Kimchi premium as proof of structural inefficiency.
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What a South Korea Crypto Market-Making Regime Would Solve?
It’s price being exact about what’s truly on the desk. The FSC is contemplating whether or not to introduce market-making, not saying an authorized exemption, a timetable, or a pilot program.
A regulated market-making framework may plausibly tighten spreads and scale back the form of order-book vacuum that permit JPYC print at 4 occasions its anticipated worth. What it will not do is assure that any stablecoin at all times trades at its reference value, and liquidity provision improves value effectivity.
The current legislation nonetheless requires exchanges to keep up surveillance for suspicious transactions and to report them to the Financial Supervisory Service, with the FSC empowered to analyze and sanction unfair buying and selling exercise. Any future carve-out for respectable liquidity provision would want to take a seat alongside these manipulation controls, not substitute them.
For now, the sign price watching isn’t whether or not Korea finally permits market makers, as the educational and regulatory groundwork for that has existed for years. It’s whether or not the FSC designs safeguards exact sufficient to separate respectable liquidity provision from the manipulation that the present legislation is constructed to catch, as a result of a framework that fails that check simply relocates the chance somewhat than eradicating it.
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