South Korea's Financial Services Commission will review lifting its ban on crypto market makers after a stablecoin listing spiked four times above its peg on Upbit. The review would fold into the Phase-2 Digital Asset Basic Act, which also covers exchange licensing and stablecoin rules.
South Korea's Financial Services Commission (FSC) said it will review legalizing crypto market makers, a practice currently banned under the Virtual Asset User Protection Act. The announcement came on September 28 at The Bridge Summit 2026 in Gangnam, Seoul.
JPYC's Spike Exposed a Thin Order Book
The review follows a market-structure failure. On September 17, Upbit listed JPYC, a yen-backed stablecoin designed to trade at one JPYC to one yen, worth approximately 8.8 KRW. Within one hour of listing, the token hit 37.6 KRW, more than four times its peg.
JPYC still redeemed at one yen with the issuer, so the spike was not an insolvency problem. Instead, a structurally thin won order book with no professional two-sided flow drove the premium. First-day won volumes ran into the hundreds of billions of KRW before issuance was paused and the premium collapsed.
FSC Director of Digital Finance Policy Yoo Young-jun acknowledged user losses from the episode. According to CoinGape: "demands for discipline in this area are expanding".
A Carve-Out Would Arrive Through Phase-2 Legislation
Any market-maker carve-out would not take effect immediately. It would arrive through Korea's Digital Asset Basic Act, a Phase-2 draft finalized earlier this year that also covers exchange licensing, stablecoin issuance, and disclosure standards.
The FSC is pushing exchanges toward statutory oversight on matching, listing, and abnormal-trade monitoring, moving away from self-regulation. Major-shareholder governance and conflict-of-interest frameworks are also under consideration.
The timing follows South Korea's recent lifting of its nine-year ban on corporate crypto investment, which opened the door for more than 3,500 firms to hold digital assets. Without legal two-sided order books, however, large corporate entries risk landing into the same thin liquidity that hit retail traders last month.
Korea's stablecoin rules have separately stalled, as the FSC and Bank of Korea disagree on who may issue a won-backed token. For now, nothing is approved. The FSC review is a policy signal, not a start date.
Source: CoinGape
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