- South Korea plans new crypto exchange ownership cap despite strong industry opposition.
- New regulations may force major Korean crypto exchanges to restructure ownership.
- Digital Asset Basic Act pushes stricter governance rules for crypto exchanges.
South Korea is preparing a major shift in how cryptocurrency exchanges operate as policymakers push forward with stricter ownership rules. Lawmakers and regulators have agreed on a framework that would limit how much control any single major shareholder can hold in a crypto exchange. The proposal has already triggered strong reactions from industry players who fear the rule could reshape the structure of some of the country’s largest trading platforms.
According to a report from the Korea Herald, representatives from the ruling Democratic Party’s digital asset task force recently met with officials from the Financial Services Commission. The meeting focused on ownership concentration in the cryptocurrency sector. Participants ultimately agreed to impose a 20% ownership cap on major shareholders in crypto exchanges.
However, regulators included a limited exception, allowing the Financial Services Commission to permit ownership stakes of up to 34% through enforcement decrees in certain situations. This provision aims to give regulators flexibility while still addressing governance risks linked to concentrated ownership.
Major exchanges will not face immediate changes, as authorities plan to provide a transition period once the legislation becomes law. Large exchanges such as Upbit and Bithumb would receive a three year grace period before the ownership cap takes effect, while smaller exchanges would gain an additional three years to restructure their ownership arrangements.
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Proposed Ownership Cap Could Reshape Major Crypto Exchanges
Several major exchanges would face significant adjustments if the proposed rule becomes law, as current ownership structures exceed the planned limit by a wide margin. For example, Bithumb Holdings controls more than 73% of Bithumb, while Binance holds more than 67% of the South Korean exchange Gopax. Consequently, these companies may need to dilute ownership or sell large portions of their stakes, a move that could significantly reshape governance structures across the sector. Regulators believe the rule could reduce risks linked to concentrated decision making within cryptocurrency exchange operations.
The ownership cap forms part of the broader Digital Asset Basic Act, which aims to establish a comprehensive regulatory framework for South Korea’s crypto industry. Besides exchange governance, the legislation will also address stablecoin issuance and crypto exchange traded funds. Regulatory momentum increased after several incidents raised concerns about internal oversight across the industry. Some reports suggested that Bithumb’s accidental transfer of roughly $43 billion worth of bitcoin heightened regulatory attention toward operational risk.
Industry organizations have strongly opposed the proposed rule, arguing that it could disrupt the country’s digital asset sector. The Digital Asset Exchange Alliance, which represents major South Korean exchanges, warned that the ownership cap could slow industry growth.
Regulatory Balance Between Oversight and Industry Growth
South Korea continues to position itself as one of the most active cryptocurrency markets globally. Consequently, policymakers face pressure to strengthen oversight while maintaining innovation in the sector.
The proposed ownership cap reflects that balancing effort. Regulators aim to limit governance risks while allowing exchanges time to adapt. Meanwhile, industry groups continue to argue that excessive intervention could disrupt a rapidly developing market.
The Financial Services Commission is expected to finalize the legislative proposal soon. Once submitted, the Digital Asset Basic Act will move closer to becoming South Korea’s primary framework for regulating cryptocurrency businesses.
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