Korean FSC Strengthens Response to Abnormal Values of Yen and Yuan in Cryptocurrency Market

Korean FSC Strengthens Response to Cryptocurrency Market Makers

On September 17, 2026, South Korea's major cryptocurrency exchange Upbit began handling the stablecoin "JPYC," designed to be pegged to the Japanese yen. At that time, the rate was equivalent to about 8.8 Korean won, but the price at the start of trading was set at 12 won.

However, within just about an hour of trading, the price surged to as high as 37.6 won, reaching more than four times the original pegged price. This phenomenon was attributed not to a rapid increase in value on the Japanese side, but rather to the extremely thin order book on Upbit and a significant lack of liquidity. The concentration of individual investors' trades in an environment without professional liquidity providers led to an imbalance in supply and demand, resulting in a significant deviation of prices from global standards.

Background of Korean FSC's Reevaluation of Market Making

In response to rising criticism and concerns that users suffered losses due to such price surges, Yoo Young-jun, the head of the Digital Financial Policy Bureau of the Korean FSC (Financial Services Commission), revealed plans to consider the necessity of a market-making mechanism to enhance market efficiency and stability.

Until now, market making in South Korea has been effectively restricted due to fears that it could induce market manipulation under strict virtual asset user protection laws. Consequently, issues such as price distortions represented by the kimchi premium and chronic liquidity shortages have been pointed out as structural challenges in the domestic market. Experts have also been discussing the introduction of exceptions to promote healthy liquidity supply, but the recent abnormal values of JPYC may serve as a significant turning point for regulatory review.

Digital Asset Basic Law and Future Outlook

This trend is positioned not merely as a troubleshooting measure but as part of broader regulatory development.

The South Korean government and related agencies are working on the formulation of a Digital Asset Basic Law that comprehensively covers the entire stablecoin and digital asset market, with discussions in the National Assembly also planned.

However, at this stage, the FSC has only expressed its intention to consider the introduction of the system, and there are no immediate plans to lift restrictions on special measures or legal market makers. Moving forward, how the progress of the basic law's legislation and the mechanisms for maintaining pegs and managing liquidity at both the issuer and exchange levels will be incorporated remains the primary focus for market participants.

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