The South Korean Financial Services Commission (FSC) is evaluating the official introduction of a market maker system within the domestic virtual asset industry. Speaking at a recent industry forum, Yoo Young-joon, the director of digital finance policy at the FSC, indicated that the regulator is exploring this mechanism to enhance market efficiency and price stability. While current legislation strictly limits such activities to prevent price manipulation, the proposed shift signals a significant evolution in South Korea's regulatory approach toward digital asset liquidity and institutional infrastructure.
Transitioning from Prohibition to Regulated Liquidity
Under the existing Virtual Asset User Protection Act, market-making activities are largely prohibited to safeguard investors from potential wash trading and unfair trade practices. However, the FSC intends to re-examine these restrictions during the second phase of the legislative process. The introduction of authorized market makers is expected to mitigate extreme volatility and ensure that buyers and sellers can execute trades at consistent prices. Market makers provide continuous buy and sell quotes, which is a standard practice in traditional finance to maintain order book depth.
"We are considering the introduction of a market maker system for the virtual asset market to improve market efficiency and stability", stated Yoo Young-joon during his address.
Enhanced Governance and Regulatory Oversight
The FSC official emphasized that the integration of market makers will be accompanied by rigorous oversight requirements. Exchanges wishing to support these entities must demonstrate sufficient capital reserves and robust operational capabilities. Furthermore, the regulatory framework is expected to shift from industry self-regulation to direct public regulation across several core areas:
- Transaction execution and trading support protocols.
- Advanced monitoring systems for abnormal trading activities.
- Strengthened governance rules for major shareholders and executive management.
- Implementation of standardized digital asset issuance and disclosure systems.
Long-term Impacts on the Digital Asset Ecosystem
The proposed legislative updates aim to foster a more diversified and trustworthy trading environment. Beyond liquidity provision, the FSC is looking into the broader implications of KRW-denominated stablecoins and enhanced user protection mechanisms. By establishing a formal legal basis for market participants, the South Korean government seeks to balance the growth of the blockchain industry with the necessity of preventing financial crimes. This move is anticipated to attract more institutional interest as the infrastructure aligns closer to global financial standards.
The second phase of the virtual asset legislation will be a critical turning point for the South Korean market. By moving toward a regulated market-making model, the FSC aims to provide a safer environment for retail investors while ensuring that cryptocurrency exchanges operate with the transparency required of traditional financial institutions. As of September 28, 2026, these considerations remain part of an ongoing policy review intended to solidify South Korea's position as a regulated hub for digital finance.
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