Quick Breakdown
- South Korea plans to cap major shareholders’ stakes in crypto exchanges at 15–20%.
- Regulators argue that exchanges should meet higher governance standards as public financial infrastructure.
- Major exchanges and ruling party lawmakers warn the move could hurt industry growth.
South Korea’s top financial regulator is moving forward with plans to restrict the level of control major shareholders can hold in domestic cryptocurrency exchanges, signalling a tougher stance on governance as digital assets become more embedded in the country’s financial system.
Korea’s Financial Regulator Weighs Ownership Caps for Crypto Exchanges
The proposal would be included in the planned Digital Asset Basic Act as part of stricter governance rules.
South Korea’s top financial regulator is pressing ahead with plans to limit the ownership stakes of…
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Financial Services Commission (FSC) Chairman Lee Eog-weon said on Wednesday that ownership limits are necessary to align crypto exchanges with the public responsibility they increasingly carry, according to a report by The Korea Times. His comments suggest regulators intend to proceed despite growing resistance from both industry players and lawmakers.
FSC reviews 15–20% ownership limit under new crypto law
The FSC is currently considering a proposal to cap controlling shareholders’ ownership stakes in crypto exchanges at 15%-20%. The measure is expected to form part of the upcoming Digital Asset Basic Act, widely seen as the second phase of South Korea’s crypto regulatory framework.
Lee noted that existing rules, largely focused on anti-money laundering and investor protection, do not sufficiently address governance risks. The new bill, however, aims to establish a comprehensive legal structure covering the entire digital asset ecosystem.
Under the proposal, crypto exchanges would shift from a renewable notification system to a permanent authorization model, effectively elevating their status within the financial system. Lee warned that excessive ownership concentration could create conflicts of interest and undermine market fairness, arguing that similar restrictions already apply to securities exchanges and alternative trading systems.
Crypto industry and lawmakers push back
The proposal has sparked strong opposition from major crypto operators. A joint council representing exchanges such as Upbit, Bithumb, and Coinone has warned that ownership caps could hinder innovation and weaken South Korea’s competitiveness in the global digital asset market.
Members of the ruling Democratic Party of Korea have also raised concerns, noting that similar ownership restrictions are uncommon internationally and could isolate South Korea from global regulatory norms. Lee acknowledged the pushback, saying discussions with lawmakers are ongoing.
The debate comes as South Korea prepares one of its most aggressive crackdowns on crypto-related financial crime, including the recent expansion of its travel rule to cover transactions below 1 million won ($680).
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