Korean Industry Pushes Stablecoin Liquidity Safeguards Amid Price Distortions

South Korea's industry is pushing for stricter regulations on stablecoins, specifically in regards to secondary-market liquidity. This comes after several tokens traded far from their reference values on local exchanges.

The proposals would cover initial circulation, issuance, redemptions, and disclosures when prices deviate from reference values. Regulatory discussions also include issuer identity, minimum capital, and reserve assets.

JPYC, a Japanese yen stablecoin, reached 37.6 won on Upbit compared to its reference price of about 8.8 won. PYUSD rose from 1,379 won to 1,760 won, while EURC reached 7,860 won on Bithumb, more than 400% above its previous closing price.

The proposed measures include designated market makers or liquidity providers, disclosures when prices move away from reference values, and limits on market-price orders. This would broaden stablecoin safeguards beyond issuers, capital, and reserves to include trading conditions after listing.