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- South Korea’s Financial Services Commission is considering a formal crypto market-making framework after a yen-backed stablecoin price spike.
- Upbit data showed 21,219 investors bought JPYC at least 10% above its reference price between Sept. 17 and Sept. 21.
- Current South Korea crypto law prohibits price stabilization, and no market-making framework or implementation timetable has been approved.
South Korea’s Financial Services Commission is considering a formal market-making framework for crypto as a recent price spike in yen-backed stablecoin JPYC highlights liquidity problems on domestic exchanges.
FSC digital finance policy chief Yoo Young-joon said on Sept. 28 that regulators will examine introducing market-making activity to improve digital asset market efficiency and stability. No framework or implementation timetable has been approved.
JPYC Reached 37.6 Won Against an 8.8 Won Reference Value
Upbit opened JPYC trading on Sept. 17, with the token starting around 12 won before climbing to 37.6 won in less than an hour.
JPYC is designed to track one Japanese yen. The prevailing won-yen exchange rate placed its reference value in the high-8-won range, meaning the 37.6 won peak was more than four times that level.
The dislocation occurred in Upbit’s secondary market rather than through a change in JPYC’s one-yen issuance and redemption model.
Limited tradable supply contributed to the move. Upbit initially supported JPYC deposits through Ethereum before adding Kaia and Polygon, increasing the routes through which additional tokens could reach the exchange. JPYC later returned to around 8 to 9 won.
21,219 Investors Bought JPYC at Least 10% Above Reference Price
Data submitted by Upbit to the office of lawmaker Park Min-kyu showed that 21,219 investors bought JPYC at least 10% above its won-equivalent reference price between Sept. 17 and Sept. 21.
They purchased 12.76 billion JPYC for a combined 259.9 billion won. Of those buyers, 2,574 purchased tokens at premiums above 300%, spending about 8.3 billion won.
The figures show the scale of trading at elevated exchange prices rather than a loss of JPYC’s underlying yen reference.
Current Crypto Law Has No Exemption for Regulated Market Making
South Korea’s Virtual Asset User Protection Act prohibits transactions intended to create a false impression of market activity or manipulate and stabilize prices. Unlike the country’s securities law, it does not contain a specific exemption permitting regulated market-making activity.
Yoo said the FSC will examine whether market-making should be formally introduced as regulators work on the next stage of digital asset legislation. The broader review also covers exchange regulation, disclosure rules and won-denominated stablecoins.
No eligibility rules, permitted strategies or implementation date for crypto market makers have been announced.
