South Korea’s FSC is reviewing a potential crypto market-making framework after JPYC briefly traded at more than four times its reference value on Upbit. Upbit data showed 21,219 investors bo
South Korea’s Financial Services Commission (FSC) is reviewing whether to introduce a formal market-making framework for digital assets after a sharp price distortion involving yen-pegged stablecoin JPYC on Upbit raised concerns over liquidity and investor protection.
FSC Director of Digital Finance Policy Yoo Young-jun said on September 28 that the regulator would review the need for market-making activities to improve the efficiency and stability of the digital-asset market. The comments do not represent an immediate rule change, and the existing restrictions on market-making remain in place.
The review follows JPYC’s September 17 listing on Upbit,the largest crypto exchange in South Korea. The token, designed to maintain a value of 1 JPYC = 1 Japanese yen. The stablecoin opened at around 12 Korean won and climbed to 37.6 won within about an hour, while its yen-linked reference value was around 8.8 won. The move pushed JPYC to more than four times its reference value before the price moved back toward the expected range as additional token supply became available.
The sharp move also drew attention to losses among retail traders. Data provided by Upbit to a South Korean lawmaker showed that 21,219 investors bought JPYC at prices more than 10% above its reference value during the five days following the listing. Their purchases totaled about 259.9 billion won, according to reporting published Monday.
So, reports attributed the sharp JPYC move to limited liquidity in the initial won market rather than a change in the stablecoin’s underlying yen reference. Market participants have subsequently called for stronger rules covering liquidity providers, issuance and redemption arrangements and controls for abnormal price movements.
JPYC was not the only stablecoin to experience unusual price movements on Korean exchanges this month. PYUSD briefly traded as high as 1,760 won on Upbit, while EURC reached 7,860 won on Bithumb, highlighting wider liquidity concerns.
South Korea’s current virtual-asset market-manipulation rules restrict professional market-making activity. Any new system would therefore require further regulatory or legislative work, with the FSC yet to announce specific licensing requirements or a timetable.
The review is also taking place alongside work on South Korea’s proposed Digital Asset Basic Act, which is expected to address stablecoins, exchanges, disclosures and other digital-asset rules.
