South Korea Weighs Market Makers After a Yen Stablecoin Trades at 4 Times Its Peg

South Korea's regulators are taking a second look at crypto market making, and the trigger was a stablecoin that traded at four times its peg. JPYC, a yen-backed token, spiked on Upbit this month, with quotes running roughly 300 percent above the value it's supposed to hold. For a token designed to sit at one yen, that isn't a wobble. That's a broken market.

The cause isn't fraud, at least not obviously. Under Korea's rules, the kind of two-sided quoting that professional market makers do every day can look a lot like price manipulation. So the desks that would normally step in, quote both sides, and drag a runaway price back toward parity mostly stay out. When a thin order book meets a sudden burst of demand, there's nobody on the other side. The price goes wherever the imbalance takes it.

That's the calculus Seoul is now weighing. A licensing framework for approved market makers would let them quote legally, with disclosure and surveillance attached, and it would hand exchanges a tool they currently lack. Korea is one of the deepest retail crypto markets on earth, and it's been running without the plumbing that every mature venue takes for granted. The 4x JPYC print is what that looks like in practice.

Who wins if the rules loosen? Regulated exchanges first, since tighter spreads and fewer dislocation events cut both customer complaints and emergency interventions. Institutional desks that already hold Korean licenses get a new revenue line. Who loses? Smaller operators that have been quietly providing liquidity in the gray zone, plus anyone whose business model depends on wide spreads. Legalization tends to squeeze that crowd.

The question now is whether the regulators running the review move quickly or let this sit through another consultation round. Reviews in Seoul are incremental by design, and nobody wants a rule that looks like it's blessing the exact behavior it was written to stop.

Here's my read: a market that can't legally hire a market maker will keep finding out the hard way. Watch whether a formal proposal lands before year end.