South Korean market participants are pushing regulators to add liquidity safeguards to upcoming won stablecoin rules after several foreign stablecoins swung far above their reference values on local exchanges in September. The proposals would sit alongside the country's second-stage digital asset legislation, which officials expect to reach a parliamentary review in November.
Repeated price distortions on Upbit and Bithumb have pushed South Korean industry participants to ask regulators to fold liquidity safeguards into future won stablecoin rules. News1 reported on Sept. 27 that market participants want regulators to examine initial circulating supply, issuance and redemption channels, market makers and controls for unusual trading. The proposals come as the country develops its second-stage digital asset legislation, which is expected to cover stablecoin issuance and circulation.
Thin liquidity distorted four stablecoins in September
JPY Coin climbed as high as 37.6 won after Upbit introduced trading on Sept. 17, against a reference value close to 8.8 won at the time. The token had started trading around 12 won before returning toward the 8-won range the following day, after Upbit expanded supported deposit networks beyond Ethereum.
PayPal USD moved less sharply but still notably, reaching an all-time high of 1,760 won on Upbit on Sept. 17 before falling toward the 1,360-won area. News1 attributed the move to constrained supply during the first stage of trading.
A separate distortion hit Circle's EURC on Bithumb, where the token reached 7,860 won shortly after midnight on Sept. 14, compared with a previous close of 1,513 won. Reports linked the spike to concentrated orders rather than any change in the euro backing the token, noting that about 60% of that day's EURC volume traded within a 15-minute window. USDG saw a similar move on Bithumb, reaching 3,048 won against a previous close near 1,358 won.
Industry wants secondary-market rules, not just reserve requirements
Debate over won-denominated stablecoins has so far centered on who can issue them, minimum capital requirements and the assets backing outstanding tokens. But industry participants cited by News1 want the framework to extend into secondary-market trading, including requiring sufficient initial circulating supply before exchange trading begins and maintaining redemption channels that can respond to shifting demand.
Some participants have proposed requiring market makers to maintain continuous buy and sell quotations, alongside displaying deviations from a reference value and restricting orders when prices move unusually far from the underlying currency. An industry official quoted by News1 said a won-backed token could still see sharp volatility if demand rises suddenly while circulating supply stays inadequate. South Korea's Financial Services Commission has not announced final rules on the proposed safeguards.
Legislation heads toward a November review
An FSC official said on Sept. 22 that the Digital Asset Framework Act is expected to reach a National Assembly bill review subcommittee in November, with ten digital asset and stablecoin proposals currently pending. One unresolved question is which companies can issue won-denominated stablecoins: the Bank of Korea has supported an initial bank-led structure, citing monetary policy and financial-stability concerns.
Source: crypto.news
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