Crypto Journalist
Amin Ayan
Crypto Journalist
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South Korea’s top financial regulator is pressing ahead with plans to limit major shareholders’ stakes in domestic crypto exchanges, signaling a stricter approach to governance as the industry’s role in the financial system expands.
Key takeaways:
- South Korea’s financial regulator is pushing to limit major shareholders’ stakes in cryptocurrency exchanges to between 15% and 20%.
- The proposal would be included in the planned Basic Law on Digital Assets as part of stricter governance rules.
- Regulators say ownership limits are needed as exchanges move toward licensed status similar to that of public financial infrastructure.
Financial Services Commission (FSC) Chairman Lee Eog-weon said on Wednesday that imposing ownership limits is necessary to align governance standards with the growing public importance of virtual asset exchanges, according to a Korea Times report.
His comments suggest the regulator intends to press ahead despite opposition from industry players and concerns raised within the ruling Democratic Party of Korea.
Korean regulator revises ownership limit from 15 to 20% for crypto exchanges
The FSC is reviewing a proposal to limit majority shareholder holdings to between 15% and 20%, according to the report.
The provision is expected to be included in the planned Basic Law on Digital Assets, 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, on the other hand, is designed to establish a comprehensive legal framework that covers the entire 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 press conference.
“The proposed change to a licensing system would effectively give exchanges permanent operational status.”
Once authorized under such a system, exchanges would no longer be treated purely as private businesses, Lee added, but would adopt characteristics closer to public financial infrastructure.
He warned that excessive ownership concentration could increase conflicts of interest and weaken market integrity.
“Stock exchanges and alternative trading systems are already subject to ownership limits, so it is reasonable to apply similar standards to virtual asset platforms,” Lee said.
Korean Crypto Exchanges Reject Proposed Ownership Limits
The proposal has generated harsh criticism from the industry.
A joint council representing major domestic exchanges including Upbit, Bithumb and Coinone previously said ownership limits could undermine the development of South Korea’s digital asset sector.
At Dunamu, Upbit operator, Chairman Song Chi-hyung and related parties control more than 28% of the company. Coinone founder Cha Myung-hoon owns about 53%.
If the proposed limit is enacted, both would have to sell significant portions of their holdings.
The ruling party has also expressed 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 measures against cryptocurrency-related financial crimes by expanding the requirements of its travel rules.
The new threshold covers transactions of less than 1 million won ($680), which until now allowed users to bypass identity checks by splitting transfers into smaller amounts.