What could change after the review?

South Korean regulators are reconsidering how market making is treated under manipulation rules, but no final policy change has been announced. A revised framework could define which liquidity activities are permissible and what compliance obligations apply. The debate centers on allowing market makers to operate without weakening safeguards against manipulation.

South Korea Reviews Crypto Market Maker Rules After JPYC Trades at 4x Peg

Q: How does a stablecoin maintain its peg?

A stablecoin aims to hold a value close to a reference asset, such as a national currency, through issuance and redemption mechanisms and market arbitrage. When the price drifts, arbitrage activity typically involves buying below the peg and selling above it, which usually pushes the price back toward the target. If market making is limited or liquidity is thin, that correction process can weaken, as the JPYC episode suggests.

South Korean regulators are reconsidering their approach to crypto market making after the yen-pegged token JPYC traded at four times its intended peg on the Upbit exchange this month, according to Cointelegraph. The review highlights the tension between manipulation safeguards and the liquidity that exchanges rely on.

Disclaimer: News content is based on public news sources and provided for information only. It does not constitute investment advice.

South Korea Reviews Crypto Market Maker Rules After JPYC Trades at 4x Peg

Cointelegraph·9/28/2026, 05:42:45· crypto

What Happened on Upbit

JPYC, a stablecoin designed to track the Japanese yen, traded at roughly four times its peg on the South Korean exchange Upbit this month, according to Cointelegraph. A stablecoin is meant to maintain a value close to its reference currency, so a fourfold deviation is an extreme dislocation for that type of asset. The episode occurred on Upbit, one of South Korea’s prominent crypto trading venues. It prompted regulators to revisit how market making is treated under the country’s manipulation rules.

Why Market Making Is Effectively Restricted

Under South Korea’s manipulation rules, crypto market making is effectively restricted, according to the source summary. Market makers normally quote both buy and sell orders to provide liquidity and reduce price gaps, but such activity can resemble conduct that regulators associate with manipulation. The rules are intended to protect investors from deceptive trading, yet they can also discourage firms from formally providing liquidity in crypto markets. Regulators are now reconsidering that approach after the JPYC incident.

How Thin Liquidity Can Distort a Peg

Stablecoins depend on continuous buying and selling to keep their market price near the peg; when liquidity is thin, a single large order can move the price far from its reference value. The JPYC move to four times its peg on Upbit illustrates how quickly a stablecoin can diverge when normal market-making activity is constrained. South Korea’s restrictions do not ban trading, but they limit the formal liquidity provision that usually helps absorb order flow. The event therefore connects a specific market-structure rule to a visible pricing failure on a major exchange.

The Regulatory Trade-off

South Korean regulators face a trade-off between deterring manipulation and allowing legitimate market-making services, the source indicates. If market makers remain effectively restricted, exchanges may face continued uncertainty over how to source liquidity while staying compliant. If regulators create a formal framework, they would need to define what separates permissible liquidity provision from manipulative behavior. The review is ongoing, and no final rule change has been announced.

What the Debate Means for Market Participants

The outcome matters for exchanges, token issuers, and traders because market-making rules shape how easily assets can be bought and sold. For stablecoin issuers such as JPYC, reliable market making can support the arbitrage that helps maintain a peg. For exchanges like Upbit, clearer rules could reduce legal uncertainty around liquidity arrangements. The JPYC spike has given South Korean regulators a concrete case to consider as they weigh changes to the current approach.

South Koreacrypto regulationstablecoinmarket makingUpbit

Frequently asked questions

What happened with JPYC on Upbit?▾

JPYC, a stablecoin designed to track the Japanese yen, traded at four times its peg on Upbit this month, according to Cointelegraph. That means its market price was far above the value it was intended to maintain. The dislocation drew attention because stablecoins are normally expected to trade close to their reference currency.

Why is crypto market making effectively restricted in South Korea?▾

South Korea’s manipulation rules treat many forms of liquidity provision as potentially manipulative, so market making is effectively restricted. The rules are designed to prevent deceptive trading that can harm investors. Regulators are now reconsidering this stance because limited market making can leave exchanges with thin liquidity.

What is a crypto market maker?▾

A market maker is a firm or individual that continuously quotes buy and sell orders for an asset to facilitate trading. By doing so, market makers can help narrow the gap between the best bid and ask and absorb temporary order imbalances. In crypto, their role is especially important for stablecoins, which rely on active trading to stay near their peg.

How does a stablecoin maintain its peg?

Key takeaways

What Happened on Upbit

Why Market Making Is Effectively Restricted

How Thin Liquidity Can Distort a Peg

The Regulatory Trade-off

What the Debate Means for Market Participants

Common mistakes to avoid

Reacting to a single headline without reading the full context — one data point is rarely the whole story.
Treating rewritten news as a signal — it describes what happened, never what to do next.
Confusing AI-rewritten content with the original source — always verify important facts against the primary report.

South Korea Reviews Crypto Market Maker Rules After JPYC Trades at 4x Peg

What Happened on Upbit

Why Market Making Is Effectively Restricted

How Thin Liquidity Can Distort a Peg

The Regulatory Trade-off

What the Debate Means for Market Participants

Frequently asked questions

Key takeaways

Common mistakes to avoid

Related reading

What Happened on Upbit

Why Market Making Is Effectively Restricted

How Thin Liquidity Can Distort a Peg

The Regulatory Trade-off

What the Debate Means for Market Participants

Frequently asked questions

Key takeaways

Common mistakes to avoid

Related reading