FSC Eyes Market-Making for Digital Assets Amid JPYC Price Surge

South Korea's Financial Services Commission (FSC) is considering introducing market-making activities for digital assets after a recent price surge in a yen-backed stablecoin on a major South Korean crypto exchange. The JPYC stablecoin, linked to the value of the Japanese yen, traded at as much as four times its peg on Upbit earlier this month.

The market opened at 12 Korean won per JPYC but reached a high of 37.6 Korean won just an hour later due to limited liquidity on Upbit. The FSC's director of digital finance policy, Yoo Young-joon, said the regulator will review introducing systems like market-making activities to increase efficiency and stability in the digital asset landscape.

The current Virtual Asset User Protection Act does not contain an exemption for market-making from its market manipulation provisions, preventing market makers from providing liquidity in crypto markets. However, researchers have called for a formal market-making framework to address liquidity problems and price discrepancies in South Korea's crypto market.