South Korea weighs legalizing crypto market makers after JPYC trades at 4 times its peg on Upbit

A stablecoin is supposed to be, well, stable. So when JPYC, a token pegged to the Japanese yen, launched on South Korea’s largest exchange and immediately tripled in price, it wasn’t a cause for celebration. It was a stress test that the country’s crypto regulatory framework failed in real time.

JPYC listed on Upbit on September 17, 2026, marking the first yen-pegged token to receive a direct Korean won (KRW) trading pair in the country. The token opened at roughly 12 KRW, which tracked its intended peg. Within hours, it had rocketed to 37.6 KRW, more than three times its reference value, before drifting back toward the peg the following day.

The regulatory gap that fueled the chaos

The price spike wasn’t caused by some exotic exploit or coordinated pump scheme. It was, in large part, a consequence of South Korea’s own rules. Under the Virtual Asset User Protection Act, market-making activities are treated as potential market manipulation. That means the professional liquidity providers who typically smooth out price swings on new listings, absorbing buy pressure and selling into demand, were effectively barred from participating.

Upbit handled over 54% of global JPYC spot volume shortly after the token hit the market. Total trading volume on the exchange exceeded 2.4 trillion KRW in the initial hours alone.

The aftermath was ugly. Data presented to South Korean lawmakers showed that more than 21,219 investors bought JPYC at premiums exceeding 10% above the reference rate in the days following the launch, spending roughly 260 billion KRW in the process. By September 21, some 3,792 of those investors were still holding positions with aggregate unrealized losses approaching 5 billion KRW.

Seoul reconsiders its approach

The JPYC episode has become a catalyst for regulatory reassessment. South Korean industry participants and lawmakers are now pushing the Financial Services Commission (FSC) to formally legitimize market-making activities for digital assets, a move that would represent a significant shift in the country’s regulatory posture.

Proponents of the change are framing it as part of the forthcoming Digital Asset Basic Act, a broader legislative effort aimed at creating a comprehensive regulatory framework for the Korean crypto market. Integrating market-making provisions into this legislation would give the FSC formal authority to license and oversee liquidity providers, rather than treating them as suspects.