South Korea Considers Legalizing Crypto Market Making Amid Price Surge

The Financial Services Commission of South Korea is considering legalizing crypto market making, which would allow exchanges to post buy and sell orders to stabilize prices. According to Yoo Young-joon, director general for digital finance policy at the FSC, the agency will review whether this practice is needed to make digital asset markets more efficient and stable.

Market makers are currently banned in South Korea under the Virtual Asset User Protection Act, which prohibits unfair trading practices such as price manipulation. However, Yoo cited the recent listing of a yen stablecoin, JPYC, on Upbit as an example of why exchanges may need public oversight.

The yen stablecoin's price surged to 37.60 won after its listing, with 21,219 investors buying at 10% or more above the won-yen rate between September 17 and 21, spending around 259.9 billion won in total. This has led to calls for rules to be put in place to protect users.

The proposed Digital Asset Basic Act, which is part of South Korea's second phase of crypto legislation, may also introduce tighter regulations on exchanges, including licensing and registration, as well as disclosure rules for domestic token issuance. Rules for major shareholders and executives could also tighten, scaled to a firm's size and business.