South Korea’s Financial Services Commission is reviewing whether to establish a formal market-making framework for digital assets after yen-backed stablecoin JPYC experienced an extreme price dislocation following its Upbit listing. FSC Digital Finance Policy Director Yoo Young-joon said at The Bridge Summit 2026 in Seoul on September 28 that regulators would examine market-making mechanisms intended to improve market efficiency and stability. The discussion remains a regulatory review rather than an approved change to South Korea’s crypto trading rules.
The JPYC episode illustrates the liquidity problem officials are examining. According to IT Chosun’s report on the listing, the stablecoin began trading on Upbit on September 17 before reaching 37.6 won while its yen-linked reference value was approximately 8.8 won. The peak was more than four times the value implied by JPYC’s 1-yen peg, although it was approximately 3.1 times its 12-won opening price. Limited initial supply and concentrated buying were cited as major contributors to the dislocation.
JPYC Revives South Korea’s Market-Maker Debate
The debate predates the September volatility. The Korea Economic Daily reported in March that the FSC was considering introducing a stock-market-style market-making framework through forthcoming digital-asset legislation. Yoo’s September remarks indicate that the policy remains under consideration and that the JPYC episode has provided a concrete example of the market-structure problem regulators are trying to address.
Current law creates an important constraint. South Korea’s Act on the Protection of Virtual Asset Users prohibits transactions intended to create a false appearance of trading activity or manipulate prices, while it does not provide the explicit market-making exemption found in some traditional securities frameworks. That does not mean every form of liquidity provision is automatically criminal, but the absence of a defined safe harbor creates legal uncertainty for professional market makers. The statute’s unfair-trading provisions carry criminal and financial penalties for prohibited manipulation.
A regulated market-making framework could instead establish conditions under which approved firms continuously post bids and offers while remaining subject to supervision, capital standards and conduct rules. Such a system could improve order-book depth and price discovery, but the FSC has not yet published eligibility requirements, quoting obligations or implementation dates. Yoo’s comments point toward the issue being considered as part of South Korea’s broader second-stage digital-asset legislation.
South Korea’s market structure makes that debate economically significant. The country accounted for roughly 30% of global crypto spot trading volume during April and May 2026, with activity particularly concentrated in altcoins. That figure applies to a specific historical period rather than representing a permanent Korean share of global volume, but it illustrates the scale of domestic trading that future liquidity rules could affect.
Broader Digital-Asset Rules Remain Unsettled
Market making is only one part of a wider regulatory overhaul. South Korea has been working through unresolved questions involving exchanges, stablecoin issuance, custody and market conduct after its broader digital-asset framework was delayed by disagreements over stablecoin rules. The FSC’s latest comments suggest liquidity provision could now become another defined component of that second-stage framework.
Other agencies are simultaneously expanding enforcement infrastructure. The National Tax Service has sought faster crypto transaction-tracing capabilities ahead of the planned 2027 tax regime, while neighboring Japan has moved toward securities-style regulation for parts of its crypto market. Those developments show East Asian regulators addressing market structure, surveillance and investor protection through different legal models.
The next concrete milestone will be publication of South Korea’s second-stage digital-asset legislation or detailed FSC rules explaining how legitimate liquidity provision would be separated from manipulation. Until those standards are published, the JPYC episode remains evidence of a liquidity problem that regulators have identified, not proof that South Korea has already authorized professional crypto market makers.