South Korea weighs crypto market makers after JPYC trades at 4 times peg

South Korea's Financial Services Commission said it is reviewing whether to permit market-making activities in the country's digital asset markets after an episode this month in which a yen-linked stablecoin traded far above its peg on a major exchange. JPYC began trading on the Upbit platform on Sept. 17 and saw its price jump from 12 Korean won to 37.6 won within an hour, a move regulators and observers traced to thin liquidity on the exchange. At a conference in Seoul, FSC digital finance policy director Yoo Young-joon said the commission will examine whether measures such as formal market-making can bolster the efficiency and stability of the digital-asset landscape. Yoo also noted criticism that the JPYC listing resulted in user losses, and said there are growing calls for stronger discipline in listing and market-structure practices. Under the current Virtual Asset User Protection Act, there is no exemption from market-manipulation provisions for market-making, effectively preventing designated market makers from operating in crypto markets. Yoo's comments indicate the FSC may be reassessing that stance to allow limited or regulated market-making as a tool to address liquidity shortfalls. The debate over a market-maker carve-out is not new in South Korea. Academic papers and industry researchers have long argued that the absence of a formal market-making framework has contributed to liquidity problems, price disparities and heightened volatility — with the so-called Kimchi premium cited as an example of domestic market inefficiency. The FSC's consideration of market-making rules comes as lawmakers continue work on a broader Digital Asset Basic Act that would set rules for stablecoins, exchanges, disclosures and internal controls, though key details such as won-denominated stablecoin rules remain unresolved.