South Korea Considers Market-Making System After JPYC Price Surge
- On Sept. 17, the stablecoin JPYC opened at 12 Korean won and surged to a high of 37.6 won within an hour on Upbit.
- The price spike was attributed to limited liquidity on the exchange, leading to user losses and criticism.
- Yoo Young-joon from the Financial Services Commission (FSC) indicated a review of market-making systems to enhance digital asset stability.
- Current regulations do not exempt market-making from market manipulation laws, limiting liquidity provision in crypto markets.
- Academics have previously called for a formal market-making framework due to liquidity issues and price discrepancies in South Korea’s crypto market.
The potential introduction of a market-making system reflects ongoing efforts by South Korea to create a comprehensive regulatory framework for its crypto industry, including rules for stablecoins and exchanges. The FSC aims to address criticisms regarding user protection following significant price fluctuations like those seen with JPYC.
With JPYC trading peaking at over four times its peg, the FSC’s consideration of a market-making system could significantly impact liquidity and stability in the digital asset landscape in South Korea. (Source)
