Korea Reconsiders Market-Making Rules Amid Stablecoin Price Spike

The Financial Services Commission (FSC) of South Korea is reevaluating its market-making rules after the yen-pegged stablecoin JPYC saw a price spike on Upbit. The incident occurred when JPYC's price jumped from 12 Korean won per token to over four times that value within an hour, highlighting issues with liquidity.

The FSC is considering introducing a regulated market-making system for digital assets to improve trading efficiency and stability in South Korea's crypto market. Currently, there is no explicit exemption under the Virtual Asset User Protection Act that would allow market makers to provide liquidity without conflicting with market manipulation provisions.

FSC officials are weighing whether to add market-making mechanisms to address concerns about price dislocations during listings, which can lead to user losses. The discussion follows JPYC's launch on Upbit earlier this month, when prices surged due to limited liquidity.