Korea's Pegged-and-Grinned: FSC Eyes Market Makers After JPYC Took a 4x Detour on Upbit 🪙

South Korea's Financial Services Commission said it is weighing whether to permit crypto market making for the first time, after a yen-pegged stablecoin briefly traded at roughly four times its intended value on Upbit earlier this month. Upbit listed JPYC on Sept. 17, with the token opening at 12 Korean won and climbing to 37.6 won within an hour, a move attributed to thin liquidity on the exchange rather than any change in its yen backing.

Speaking at The Bridge Summit 2026 in Gangnam, Seoul on Monday, Yoo Young-joon, director of digital finance policy at the FSC, said the regulator would also review the need to introduce market-making systems to lift the efficiency and stability of the digital asset landscape. Yoo added that there were criticisms that user losses occurred from the price surge after the JPYC listing, so demands for discipline in this area are expanding.

South Korea's Virtual Asset User Protection Act currently does not exempt market-making activity from its market manipulation provisions, effectively banning professional liquidity providers from operating in domestic crypto markets. Yoo's comments suggest that ban may be revisited as part of the country's broader Digital Asset Basic Act, a consolidated framework announced by the FSC in July covering stablecoins, exchanges, disclosures and internal controls. Lawmakers have yet to settle several key provisions, including rules for won-denominated stablecoin issuers.

Academic debate over a carve-out predates the JPYC episode. A 2024 peer-reviewed paper in Seoul Law Review by KB Securities researcher Lee Min Jung argued that introducing market makers would be premature over manipulation concerns, though she said regulators could revisit the question once the market stabilizes. A separate paper by Yoonyoung Choi from the Korbit Research Center said the domestic crypto market has been experiencing serious liquidity problems due to the absence of a formal market maker system, citing the Kimchi premium as an example of inefficiency in Korean crypto pricing.

The FSC has previously said the Phase-2 Digital Asset Basic Act would package exchange licensing, stablecoin oversight and disclosure standards together with any market-making framework. Separately, South Korea has dropped the Travel Rule threshold for crypto transfers, tightening operational rules for virtual asset service providers even as liquidity provisions remain under review.