South Korea’s Financial Services Commission (FSC) is reviewing whether to introduce a formal market-making system for digital assets after yen-backed stablecoin JPYC traded at more than four times its intended value on Upbit, according to a report from Digital Asset.
FSC Director of Digital Finance Policy Yoo Young-joon said the regulator would review the need for market-making activities to improve the efficiency and stability of the digital-asset market. He also acknowledged concerns over user losses following the JPYC price surge.
The remarks do not represent an immediate change to South Korea’s rules. Market-making remains restricted under the country’s current virtual-asset market manipulation framework, and any new system would require further regulatory and legislative work.
JPYC Surged to 37.6 Won on Upbit
Upbit, one of the major exchanges traders use to buy and sell cryptocurrency in South Korea, began trading JPYC, a stablecoin designed to track the Japanese yen, on September 17.
The token opened at 12 Korean won and climbed to 37.6 won within about an hour, more than four times the value implied by its yen peg. JPYC is designed to maintain a value of one Japanese yen per token, which was around 8.8 won at the time.
The sharp move was linked to limited liquidity and strong buying demand at the start of trading. As more JPYC became available and trading liquidity increased, its price moved back toward the level implied by its yen peg.
The sharp price surge also resulted in losses for some Korean traders. Data submitted by Upbit to a South Korean lawmaker showed that 21,219 investors bought JPYC at prices more than 10% above the yen-won reference rate during the five days following the listing. Their purchases totaled about 259.9 billion won.
FSC Considers a Formal Market-Making System
The FSC is now considering whether to allow professional market makers to provide liquidity in South Korea’s crypto market under a defined regulatory framework.
Yoo said the regulator would review “the need to introduce systems such as market-making activities” to improve market efficiency and stability.
Market makers generally place both buy and sell orders to provide liquidity and help narrow the gap between available bids and offers. In traditional financial markets, this can make it easier for buyers and sellers to execute trades without large price movements.
South Korea’s current crypto rules do not provide a specific market-making exemption from market manipulation provisions. As a result, professional liquidity provision has faced regulatory restrictions in the digital-asset market.
Any future system would therefore need to distinguish legitimate liquidity provision from price-manipulating activity.
| Detail | Current Status |
| Regulator | South Korea’s Financial Services Commission |
| Proposal | Review of a digital-asset market-making system |
| Current market-making rules | No specific exemption under existing framework |
| Trigger | JPYC price surge on Upbit |
| JPYC listing | September 17 |
| JPYC peak | 37.6 KRW |
Table 1. South Korea’s review of crypto market-making rules following the JPYC price surge.
JPYC Highlighted Liquidity Problems
The JPYC episode has renewed discussion about liquidity in South Korea’s crypto market.
Researchers had previously argued that the absence of a formal market-maker system could contribute to price differences and higher volatility. One study cited by industry reports linked the lack of professional liquidity provision to inefficiencies in the local market.
The JPYC listing provided a recent example of how limited order-book depth can affect prices when demand rises sharply. This kind of gap between a token’s market price and the value it’s supposed to track is exactly what determines whether a stablecoin holds its peg.
The situation was also unusual because JPYC is designed to track the Japanese yen rather than operate as a freely floating cryptocurrency. A large premium therefore represented a substantial difference between the token’s market price on Upbit and its underlying reference value.
Any Change Would Require New Rules
The FSC is not lifting the existing restrictions immediately. Instead, market-making rules are being considered as part of South Korea’s wider effort to establish a more detailed regulatory framework for digital assets.
The country is working on a Digital Asset Basic Act that is expected to cover areas including stablecoins, exchanges, disclosures and internal controls. Lawmakers are still working through several parts of the proposed framework, including rules for won-denominated stablecoins.
A future market-making system could therefore come with specific requirements for licensing, disclosure, monitoring and separation from activities that could influence prices improperly.
South Korea Also Faces Stablecoin Policy Questions
The JPYC incident comes as South Korea debates how stablecoins should operate in its domestic financial system, part of a broader wave of stablecoin regulation moving through markets worldwide.
JPYC is issued in Japan and tracks the yen, giving Korean users access to a foreign-currency stablecoin through a won trading pair on Upbit. Its listing has also drawn attention to cross-border payments and digital-asset flows.
South Korean authorities have separately been examining the domestic use of offshore stablecoins, while the Bank of Korea has studied how stablecoin markets could interact with traditional foreign-exchange markets.
The market-making review is therefore taking place alongside wider discussions about stablecoins, exchange regulation and the structure of South Korea’s digital-asset market.
What Comes Next
The FSC will need to determine whether a market-making system should be introduced and, if so, what safeguards should apply. Any changes would likely require further regulatory or legislative action rather than taking effect immediately.
The JPYC episode will also remain relevant as South Korea evaluates how exchanges handle new asset listings, liquidity, and abnormal price movements.
What This Means for You: South Korea has not yet legalized crypto market makers. The FSC is reviewing whether a formal system could improve liquidity and market stability after JPYC traded far above its yen-linked value on Upbit. Any change will depend on the regulator’s review and the country’s broader digital-asset legislation.
