Research Article
Addressing Liquidity Challenges in Korea’s Crypto Market: The Need for Market Makers
Korbit Research Center
Published: January 2025 · Vol. 29, No. 2 · pp. 171-183
DOI: https://doi.org/10.17287/kbr.2025.29.2.171
Full Text
Abstract
This study examines the necessity of introducing structured market-making mechanisms to address liquidity shortages in the Korean cryptocurrency market. While global exchanges have integrated market makers to enhance trading efficiency, Korea lacks a formal framework for such liquidity provisioning. The absence of market makers, coupled with restrictions on institutional participation, has led to fragmented liquidity, increased price inefficiencies, and heightened volatility. By comparing Korea’s market structure with global counterparts, I assess the potential impact of market-making initiatives in stabilizing trading conditions. I also explore regulatory gaps that hinder liquidity solutions, discussing how clear policies can differentiate legitimate market-making from manipulative trading practices. Our findings suggest that structured market-making could significantly improve price stability, trading efficiency, and investor confidence while positioning Korea’s crypto market for greater global competitiveness. This study provides policy insights to guide the development of a regulatory framework that supports market liquidity, institutional participation, and sustainable market growth.
