The price of yen-pegged stablecoin JPY Coin (JPYC) surged unexpectedly on South Korea’s Upbit exchange on Sept. 17. The digital token spiked above 37.6 won, creating a price deviation of more than four times its reference value of just 8.8 won.
Initial trading of JPYC on the local exchange opened around 12 won. The extreme surge was driven by heavy demand from local investors clashing with scarce supply. The token’s price only normalized back to around 8 won after Upbit enabled additional deposits via the Kaia and Polygon networks to complement its existing Ethereum channel.
JPYC was not the only store of value to experience a supply crunch. The PayPal USD (PYUSD) stablecoin also surged sharply to a record high of 1,760 won on Upbit before retreating to around 1,360 won amid tight liquidity. Abnormal price swings even spread to the EURC stablecoin in the won market.
Industry Players Demand Specific Rules
The series of exchange-rate anomalies on the local exchange triggered a swift response. Crypto industry groups in South Korea urged regulators to draft binding liquidity protection clauses for new won stablecoin regulations. They called on the government to establish strict legal guardrails to ensure such abnormal price movements do not recur.
The market’s demands come as lawmakers draft the second phase of digital asset legislation. This upcoming framework from the South Korean government focuses supervisory attention on the smooth circulation of stablecoins and legal requirements for domestic asset issuance.
The crypto industry has called on authorities to set detailed requirements for an asset’s initial circulating supply. They demand official channels for token redemption and issuance, along with a defined list of obligations for market makers. Observers also emphasized the need for mechanisms to handle suspicious transactions to maintain market stability during volatile conditions.
Liquidity Guarantees Become Non-Negotiable
The pricing chaos surrounding JPYC and PYUSD serves as proof that a stablecoin’s peg means little without adequate liquidity. When a wave of buyers arrives while available supply is constrained, pegged tokens can quickly turn into speculative battlegrounds. The passage of the second-phase digital asset act will now play a decisive role in establishing legal standards to protect stablecoin investors in South Korea.
Reported by crypto.news.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
