South Korea Considers Crypto Market Makers After Yen Stablecoin JPYC Trades at Four Times Its Peg

South Korea’s Financial Services Commission says it is considering a market making system for digital assets after a yen-backed stablecoin, JPYC, traded at as much as four times its peg on a major local exchange. Trading opened on September 17 at 12 Korean won per token, then hit 37.6 won about an hour later. The spike was blamed on thin liquidity. Yoo Young-joon, the FSC’s director of digital finance policy, said regulators will review whether systems like market making are needed to make the market more efficient and stable, adding that users suffered losses and calls for discipline are growing.

Why Crypto Market Making Is Restricted

The Virtual Asset User Protection Act has no market making exemption from its manipulation rules, which stops market makers from providing liquidity. A 2024 academic paper said regulators had refused market making over manipulation fears, though it suggested a carve-out could be considered once the market matures. Other researchers have argued the lack of a formal system causes serious liquidity problems, price gaps and heavy volatility, citing the Kimchi premium as an example.

Digital Asset Basic Act Still Unsettled

The review comes as the FSC works on a consolidated Digital Asset Basic Act covering stablecoins, exchanges, disclosures and internal controls. Lawmakers have yet to agree on key points, including rules for won denominated stablecoin issuers.