The Digital Asset Exchange Alliance (DAXA), representing South Korea's five major cryptocurrency exchanges, has launched a forceful opposition against a government proposal to cap major shareholder stakes in digital asset exchanges. The Financial Services Commission (FSC) is considering limiting individual ownership to between 15% and 20% of exchange equity, a move aimed at preventing market concentration and enhancing consumer protection.
DAXA, which includes Upbit, Bithumb, Korbit, Coinone, and Gopax, issued a formal statement warning that the restrictions could "significantly impede" the growth of the domestic digital asset industry and lead to catastrophic market consequences. The alliance argued that such caps could trigger capital flight, with South Korea's approximately 6 million registered exchange users migrating to international platforms, thereby eroding the country's global competitiveness.
"Unlike securities, digital assets circulate across borders without restriction," DAXA stated. "If investment in domestic exchanges is not sustained, it could lead to a loss of global competitiveness, prompting users to migrate to overseas platforms." The group further contended that dispersing ownership would dilute the ultimate accountability major shareholders have for user asset custody, potentially harming the very consumer protections the rule seeks to strengthen.
The proposal arrives as South Korea prepares to finalize its second comprehensive regulatory framework, the Digital Asset Basic Act, expected in the first quarter of 2026. This legislation will also formalize rules for Korean won-pegged stablecoins and the country's first spot crypto ETFs. The ownership cap debate follows recent industry consolidation, including Upbit's pending merger with Naver Financial and Mirae Asset Group's talks to acquire Korbit.
Industry experts and DAXA warn that the regulation creates uncertainty that could stifle entrepreneurship, reduce investment in cybersecurity and innovation, and force technological development to more permissive jurisdictions. The outcome of this regulatory confrontation is being closely watched internationally, as South Korea's decisions often influence policy discussions across Asia.
