South Korea Wants Rules to Stop Stablecoins Trading at Four Times Their Value After JPYC Hit 37.6 Won on Upbit

South Korean industry participants are calling for liquidity safeguards to be written into the country’s upcoming won stablecoin rules, after three foreign stablecoins recorded wild price distortions on domestic exchanges during September.

By Raj Patel | September 27, 2026

The Hook: When a Stablecoin Is Not Stable at All

A stablecoin is supposed to be boring. One token, one unit of a real currency, no drama. That is the entire product. But on South Korean exchanges in September, several foreign stablecoins behaved like speculative memecoins, and the episode has pushed liquidity rules to the center of the country’s next big piece of crypto legislation.

News1 reported on Sept. 27 that market participants want regulators to look beyond who issues a stablecoin and what backs it. They want rules covering the moment a token actually starts trading: how much of it is in circulation, how it can be redeemed, who is quoting prices, and what happens when trading goes haywire. South Korea’s second-stage digital asset legislation, which is expected to cover stablecoin issuance and circulation, is on track to reach a National Assembly bill review subcommittee in November, according to an official from the Financial Services Commission quoted on Sept. 22.

What Actually Happened on Korean Exchanges

The evidence behind the push is hard to ignore. On Sept. 17, the yen-linked stablecoin JPYC began trading on Upbit, South Korea’s largest exchange — and immediately went off the rails.

• JPYC spiked to 37.6 won — more than four times its reference value of about 8.8 won — after trading opened around 12 won and buying demand met almost no sell-side supply, according to Yonhap.
• Upbit expanded deposit networks beyond Ethereum to Kaia and Polygon, letting more JPYC reach the exchange. The token fell back toward the 8-won range the next day.
• PayPal USD (PYUSD) hit 1,760 won on the same exchange the same day — an all-time high on the venue — before settling toward the 1,360-won area.
• EURC, Circle’s euro stablecoin, surged to 7,860 won on Bithumb just after midnight on Sept. 14, up more than 400 percent from its previous close of 1,513 won, while overseas prices stayed near the euro’s actual value.
• Roughly 60 percent of that day’s EURC volume was executed within a single 15-minute window, based on Bithumb trading data cited in reports.

Another dollar token, USDG, reached 3,048 won on Bithumb against a previous close near 1,358 won during the same period. None of these moves reflected a collapse in the underlying currencies. They reflected something much simpler: too many buyers, too few tokens, and no mechanism to fix it in real time.

Why Reserves Are Not Enough: The Plumbing Problem

Here is the part regular investors should understand, because it explains the whole debate. A stablecoin has two layers, like a banknote has paper and a promise.

The first layer is the reserve — the assets the issuer holds so you can redeem one token for one unit of the real currency. Most regulation, in Korea and elsewhere, focuses here: minimum capital, allowed backing assets, redemption rights.

The second layer is the exchange price — what people will actually pay for the token on a Tuesday night. That price is set by supply and demand on the venue, not by the reserve. If only a small amount of a token is circulating on one exchange and a wave of buyers arrives, the price rips higher regardless of what the issuer holds. An industry official quoted by News1 made exactly this point: a won-backed token could still seesaw violently if demand rises suddenly while circulating supply is inadequate.

Think of it like a concert ticket. The face value is printed on the ticket, but if only fifty tickets reach the market and ten thousand fans want them, the street price soars. The printer’s guarantee means nothing to the person in the queue.

What Korea’s Industry Is Proposing

The proposals reported by News1 aim squarely at the second layer. They include:

• Minimum initial circulating supply before exchange trading is allowed to begin.
• Issuance and redemption channels that can respond quickly when market demand shifts, giving arbitrageurs a way to close price gaps.
• Market maker requirements — firms committed to continuously posting both buy and sell quotes.
• Deviation displays and order restrictions when prices move unusually far from the reference currency.

The Financial Services Commission has not announced final rules covering these liquidity safeguards, and the regulator has repeatedly cautioned that major parts of the second-stage framework remain under discussion. Korea’s existing coverage of the space — from cross-chain Korean won tokens to bank pilots — has so far focused on issuance, not trading dynamics.

What This Means for You

If you hold stablecoins on an exchange, the Korean episode is a warning worth filing away. The token in your account can trade far above its peg — and if you buy at the top of one of these spikes, you can lose real money on an asset designed to never move.

The practical defenses are simple. Check the token’s price against its reference value on other venues before buying during a hype wave. Be especially careful in the first hours after a listing, when supply on a single exchange is thinnest. And treat any stablecoin trading at a large premium as a market malfunction, not an opportunity.

The Verdict

Korea is moving toward one of the more honest pieces of stablecoin regulation in development, because it targets the place where retail investors actually get hurt: the order book, not the vault. The November parliamentary review will show whether liquidity safeguards survive contact with the legislative process. Until then, the September price distortions stand as the clearest recent demonstration that a stablecoin is only as stable as the market it trades in.

The cryptocurrency market remains highly volatile. This article is for informational purposes only and does not constitute financial advice.