South Korea Considers Market-Making System After Stablecoin Surge

The Financial Services Commission (FSC) of South Korea is considering introducing a market-making system for digital assets after a stablecoin called JPYC surged on Upbit to over four times its opening price.

The spike in JPYC's price was attributed to limited liquidity, with there being not enough buyers and sellers available at prices traders were willing to accept. A market maker helps by continuously offering both bids and offers, making it easier for traders to buy or sell without waiting for another trader to appear.

However, the introduction of a market-making system is not without its challenges. The Virtual Asset User Protection Act currently does not provide an exemption for market makers from its provisions against market manipulation, which could prevent market makers from providing liquidity in crypto markets.