South Korea Eyes Lifting Crypto Market Maker Ban Amid Thin Liquidity Concerns

The South Korean Financial Services Commission (FSC) has announced plans to review and potentially lift its ban on crypto market makers. This move comes after a recent incident involving JPYC, a yen-backed stablecoin that listed on Upbit but traded at an inflated price due to thin liquidity in the Korean market.

The FSC's Director of Digital Finance Policy, Yoo Young-jun, stated that they will review the necessity of introducing systems such as market-making activities to enhance efficiency and stability of digital asset markets. This review is a significant shift in policy for one of the world's largest retail crypto markets.

The ban on corporate crypto investment was recently lifted, allowing over 3,500 firms to hold digital assets. However, without legal two-sided order books, large corporate entries risk landing into thin liquidity, exacerbating market structure issues.