Crypto Market-Making Review
South Korea Considers Crypto Market-Making Rules Following Extreme Stablecoin Price Volatility
Anonymous
South Korea’s Financial Services Commission is considering a framework for market-making in digital assets after yen-backed stablecoin JPYC briefly traded at more than four times its value following its Upbit debut, a surge attributed to limited liquidity that drew criticism over user losses. Current law does not exempt market-making from rules against market manipulation, effectively preventing the practice in crypto markets. The regulator’s review comes as South Korea develops broader digital-asset legislation expected to address stablecoins, exchanges, disclosures and internal controls. Researchers have debated whether a market-making carve-out could improve liquidity and pricing, while cautioning that safeguards against manipulation would be important.
Key Points
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On the same day JPYC surged, another stablecoin on Upbit, PYUSD, also swung sharply: it reached a reported high of 1,760 won before falling toward 1,360 won.
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The FSC said in July it planned to introduce a consolidated Digital Asset Basic Act, intended to cover stablecoin issuance and circulation as well as rules for digital-asset businesses.
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Korbit Research Center researcher Yoonyoung Choi has argued that the absence of a formal market-maker regime contributes to price gaps and elevated volatility, citing the Kimchi premium as an example of market inefficiency.
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