South Korea’s crypto industry faces new uncertainty as lawmakers consider imposing ownership limits on centralized exchanges. This change could force major shareholders to sell significant stakes in the country’s largest trading platforms holdings Research Lead at FourPillers.
This proposal is part of the upcoming Digital Asset Basic Act Phase 2. This bill aims to define and regulate crypto markets more clearly, similar to the ongoing discussions about the US crypto market structure. However, instead of providing clarity, the issue of exchange ownership is quickly becoming a divisive topic in the legislation.
Ruling party pushes exchange ownership limits
The ruling Democratic Party has confirmed plans to include ownership caps for crypto exchanges like Upbit, Bithumb, Coinone, Korbit, and Gopax. The party believes that centralized exchanges should be treated like Alternative Trading Systems under South Korea’s Capital Markets Act, where major shareholders can own no more than 15 per cent.
If this applies to crypto exchanges, the impact could be immediate and severe. Estimates suggest that major shareholders might have to sell between 5 per cent and 58 per cent of their holdings to comply. According to industry observers, this would represent one of the most significant interventions in exchange ownership structures in a major crypto market.
Industry and opposition push back hard
The opposition party has strongly opposed the proposal, arguing that forced ownership sales would harm investor confidence and disrupt free market principles. Critics contend that applying traditional securities rules to crypto exchanges overlooks the unique nature of digital asset markets and risks pushing innovation overseas.
The timing has also raised concerns. Large Korean companies like Naver Financial and Mirae Asset have recently explored possible acquisitions involving Upbit and Korbit. Ownership caps could significantly affect these discussions, cooling merger and acquisition activity just as institutional interest in crypto infrastructure rises.
Meanwhile, South Korea is stepping up oversight of the cryptocurrency market, announcing a series of targeted investigations aimed at curbing manipulation and restoring order across digital asset trading.
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