South Korea’s financial regulator is considering whether to permit a formal market-making system for digital assets after a yen-backed stablecoin rose to more than four times its intended value on Upbit, highlighting concerns about liquidity and the rules governing crypto trading.
According to Cointelegraph, the Financial Services Commission is reviewing the possibility of allowing market-making activities to improve the efficiency and stability of the country’s digital-asset markets. The discussion follows an unusually sharp move in JPYC, a stablecoin designed to track the Japanese yen, after it was listed on the Upbit exchange.
JPYC began trading on Upbit on Sept. 17 at 12 South Korean won. Within about an hour, its price reached 37.6 won, a level more than four times the value it was intended to represent. The episode was attributed to limited liquidity on the exchange. The move also raised concerns that users may have suffered losses by buying during the surge.
Why the JPYC move matters
A stablecoin is a digital asset designed to maintain a relatively stable value against another asset, such as a national currency. A yen-backed stablecoin is intended to reflect the value of the Japanese yen, so a sudden move to 37.6 won per JPYC represented a substantial departure from that expected relationship.
The FSC’s Yoo Young-joon, director of digital finance policy, said at a conference in Seoul on Monday that the regulator would examine whether systems such as market making should be introduced. He also referred to criticism that users incurred losses after the JPYC listing and said calls for greater discipline in this area were increasing.
Market makers generally provide buy and sell orders so that trading can take place more easily and with smaller gaps between prices. In markets with limited liquidity, the absence of such activity can make relatively small orders move prices sharply. In the JPYC case, the regulator’s comments link the liquidity problem to a broader question: whether carefully defined market-making activity should be allowed without being treated as market manipulation.
Existing restrictions and the policy debate
South Korea’s Virtual Asset User Protection Act does not currently provide an exemption for market-making from its provisions on market manipulation. As a result, market makers cannot freely provide liquidity in the country’s crypto markets under a formal framework.
The FSC’s latest comments indicate that this position may be reconsidered, although the source material does not say that a new system has been approved or provide a timetable for any change. Any framework would have to address the tension between supporting orderly trading and preventing conduct that could distort prices.
The issue has been discussed by South Korean researchers before the JPYC incident. A 2024 peer-reviewed paper in Seoul Law Review by Lee Min Jung, a researcher at KB Securities, said regulators had not permitted crypto market making because it could constitute market manipulation. Lee argued that introducing market makers was premature at that time because of those risks, while also saying that regulators could consider an exemption once the market became more stable.
Another paper, by Yoonyoung Choi of the Korbit Research Center, argued that the domestic crypto market had serious liquidity problems because it lacked a formal market-maker system. The research cited price discrepancies and high volatility, including the so-called Kimchi premium, as examples of inefficiency in South Korea’s market.
Wider regulatory framework
The debate over liquidity is taking place alongside a broader effort to develop South Korea’s crypto rules. In July, the FSC said it planned to introduce a consolidated Digital Asset Basic Act. The proposed legislation is intended to cover stablecoins and the wider digital-asset market, including requirements for digital-asset businesses, exchanges, disclosures and internal controls.
Several important elements had not yet been settled by lawmakers, including the rules that would apply to issuers of stablecoins denominated in South Korean won. That unresolved issue is separate from JPYC’s yen linkage, but it shows how market-making rules form part of a larger regulatory debate about digital assets and payment-linked tokens.
For now, the FSC’s position remains under review. The JPYC episode has provided a concrete example of how thin liquidity can produce extreme prices and has renewed discussion over whether regulated liquidity providers could make crypto trading more orderly while remaining subject to safeguards against manipulation.
Current crypto market picture
Moneyiar market data as of Sept. 25, 2026, at 22:03 +03:30 showed mixed performance among the selected assets:
- Monad (MON): $0.0259233891, up 3.26% over 24 hours and 3.03% over seven days.
- AKEDO (AKE): $0.0322406544, down 9.78% over 24 hours and 27.87% over seven days.
- Alchemy Pay (ACH): $0.006147619, up 1.08% over 24 hours and 4.68% over seven days.
- Ontology (ONT): $0.058368574, up 1.33% over 24 hours and 10.28% over seven days.
