South Korea’s top financial regulator is pressing ahead with plans to limit the ownership stakes of major shareholders in domestic crypto exchanges, signaling a tougher approach to governance as the industry’s role in the financial system expands.
Key Takeaways:
- South Korea’s financial regulator is pushing to cap major shareholders’ stakes in crypto exchanges at 15%–20%.
- The proposal would be included in the planned Digital Asset Basic Act as part of stricter governance rules.
- Regulators say ownership limits are needed as exchanges move toward licensed status similar to public financial infrastructure.
Financial Services Commission (FSC) Chairman Lee Eog-weon said Wednesday that imposing ownership caps is necessary to bring governance standards in line with the growing public importance of virtual asset exchanges, according to a report by the Korea Times.
His remarks suggest the regulator intends to move forward despite pushback from industry players and concerns raised within the ruling Democratic Party of Korea.
Korea Regulator Reviews 15–20% Ownership Cap for Crypto Exchanges
The FSC is reviewing a proposal to cap controlling shareholders’ stakes at around 15% to 20%, per the report.
The provision is expected to be included in the planned Digital Asset Basic Act, often described as the second phase of South Korea’s virtual asset legislation.
Lee said existing laws, including those governing anti-money laundering and investor protection, are limited in scope and do not address broader governance issues.
The new bill, by contrast, is designed to establish a comprehensive legal framework covering the full digital asset ecosystem, from service providers to market participants.
“Under the current system, virtual asset exchanges operate under a notification system that requires renewal every three years,” Lee said at a media briefing.
“The proposed shift to an authorization system would effectively grant exchanges permanent operating status.”
Once licensed under such a system, exchanges would no longer be treated purely as private businesses, Lee added, but would take on characteristics closer to public financial infrastructure.
He warned that excessive concentration of ownership could heighten conflicts of interest and weaken market integrity.
“Securities exchanges and alternative trading systems are already subject to ownership limits, making it reasonable to apply similar standards to virtual asset platforms,” Lee said.
Korean Crypto Exchanges Push Back Against Proposed Ownership Caps
The proposal has drawn sharp criticism from the industry.
A joint council representing major domestic exchanges, including Upbit, Bithumb and Coinone, said earlier that ownership caps could undermine the development of South Korea’s digital asset sector.
At Dunamu, the operator of Upbit, Chair Song Chi-hyung and related parties control more than 28% of the company. Coinone founder Cha Myung-hoon holds roughly 53%.
If the proposed cap is enacted, both would be required to divest significant portions of their stakes.
The ruling party has also voiced reservations, arguing that similar ownership limits are rare internationally and could leave South Korea out of step with global regulatory trends.
Lee acknowledged the concerns and said discussions with lawmakers are ongoing.
Last month, South Korea revealed that it is preparing one of its most aggressive crackdowns on cryptocurrency-related financial crime by expanding its travel rule requirements.
The new threshold covers transactions under 1 million won ($680), which until now allowed users to bypass identity checks by breaking transfers into smaller amounts.
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