- South Korea plans to limit the ownership of major crypto exchanges to 20%.
- Once the law is finalized, exchanges would have 3 years to meet the new ownership limits.
- FSC has agreed to allow up to 34% ownership under certain exceptions.
South Korean officials have reportedly decided to cap how much equity major shareholders can hold in local crypto exchanges, limiting it to 20%. If the rule takes effect, big players like Upbit and Bithumb could be forced to restructure.
This is part of the country’s long-awaited Digital Asset Basic Act, which is a comprehensive regulatory framework. Its main goals are to tighten oversight, protect investors, and bring order to one of Asia’s busiest crypto markets.
Local reports say regulators from the Financial Services Commission (FSC) and lawmakers on the ruling party’s Digital Asset Task Force have come to terms on the cap after recent talks.
Once the law is finalized, exchanges would have three years to meet the new ownership limits. Smaller platforms might get an extra three years to make the change.
If the rule goes through, companies with heavy ownership stakes (such as Bithumb Holdings owning over 70% of Bithumb, or Binance holding more than 65% of Gopax) would have to sell down or restructure to get under the 20% cap.
The regulation aims to cut down on risks tied to too much control in one place and bring crypto exchange governance closer to what’s expected in traditional finance.
Additionally, FSC has agreed to allow up to 34% ownership under certain exceptions. However, that rule only applies to new business owners and not the ones already in place.
Industry Reactions
Industry reaction has been mixed. Local exchanges and trade groups have pushed back on similar ideas before, arguing that forcing private owners to cap their stakes messes with property rights, weakens governance, and hurts growth, especially when South Korean platforms are already going up against foreign competition.
For instance, in January, the announcement triggered serious pushback from DAXA, the group that represents South Korea’s top five exchanges, including Upbit and Bithumb.
DAXA warned that capping the amount owners can hold would seriously slow down the growth of South Korea’s crypto industry. The group stated that forcing private companies to change their ownership setup just undermines a sector still finding its footing.
Related: South Korea to Force Crypto Influencers to Reveal Personal Holdings
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