South Korea's Financial Services Commission (FSC) and the ruling Democratic Party's digital asset task force have finalized a new regulation that will cap the ownership stake of any major shareholder in a domestic cryptocurrency exchange at 20%. This rule is a key component of the forthcoming Digital Asset Basic Act and aims to prevent excessive control by a few entities, thereby improving governance and transparency on major trading platforms.
The regulation includes a three-year grace period for exchanges to comply from the law's enforcement date. Smaller exchanges may receive an additional three-year extension. However, this cap presents a significant challenge for the country's dominant platforms. For instance, Upbit chairman Song Chi-hyung holds about 25.52%, Bithumb Holdings owns roughly 73.56% of Bithumb, and Coinone chairman Cha Myung-hoon controls about 53.44%. Other major players like Mirae Asset Consulting (set to hold ~92.06% of Korbit) and Binance (~67.45% of GOPAX) also exceed the limit and will be forced to restructure their ownership.
Authorities have indicated that exceptions allowing stakes up to 34% may be granted to new businesses via an enforcement decree, referencing the Commercial Act's 33.3% veto threshold. While the measure is designed to foster a more level playing field and decentralize decision-making, it faces legislative hurdles. Some lawmakers and industry insiders have raised concerns, warning that such an "unprecedented" global move could limit competition, slow innovation, and create higher barriers to entry, potentially deterring large capital inflows in the short term.
This ownership cap is part of a broader regulatory tightening in South Korea. Recent amendments to the crypto licensing framework now allow authorities to scrutinize executives and major shareholders for a wider range of violations, including drug trafficking and tax evasion. The government's stated goal is to balance market growth with robust oversight, ensuring exchanges remain competitive globally while building a safer, more transparent digital asset ecosystem.
