Key Insights:
- Crypto News: South Korea planned a 20% ownership cap for exchange shareholders.
- Upbit and Bithumb faced ownership restructuring under the proposed rule.
- Industry voices warned the cap could affect competition and new entrants.
South Korea’s government and ruling party agreed on a proposal to limit ownership in domestic crypto exchanges. Herald Economy reported Wednesday that regulators supported a rule capping major shareholder stakes. Authorities discussed the measure alongside the Financial Services Commission during policy coordination meetings in Seoul.
The proposal emerged during ongoing regulatory tightening in the sector. Crypto News coverage increasingly tracked stricter oversight across major Asian digital asset markets. South Korea remained one of the most active trading hubs, which pushed policymakers to review exchange governance structures.
Korea Moves Toward Exchange Ownership Cap
Herald Economy reported that the Democratic Party of Korea’s digital asset task force supported the ownership restriction plan. Policymakers proposed limiting major shareholders to a 20% maximum stake in domestic exchanges. The plan referenced a shareholder veto threshold under the country’s Commercial Act.
Authorities considered flexibility for new companies entering the market. Regulators discussed allowing ownership up to 34% through enforcement decrees under specific conditions. The threshold mirrored the legal structure where minority investors hold blocking power in shareholder meetings.
The proposed rule included a transitional period for current operators. Exchanges would receive three years after the law’s enforcement to adjust shareholder structures. Smaller platforms could obtain an extra three-year grace period before compliance deadlines.
South Korea’s exchange sector remained highly concentrated among a few dominant operators. Upbit and Bithumb together controlled close to nine-tenths of domestic trading volume. Regulators believed ownership diversification might reduce influence from controlling investors.
Major Korean Exchanges Hold Concentrated Stakes
CoinGecko data showed current ownership levels across major exchanges exceeded the proposed threshold. Upbit chairman Song Chi-hyung controlled about 25.52% of the platform’s parent company. Bithumb Holdings maintained around 73.56% ownership of Bithumb’s operating structure.
Coinone chairman Cha Myung-hoon also maintained a controlling stake. Corporate filings showed he held roughly 53.44% of the exchange. Korbit’s ownership structure remained even more concentrated after acquisition activity.
Mirae Asset Consulting is prepared to hold roughly 92.06% of Korbit after completing the deal. Binance maintained a 67.45% ownership stake in GOPAX. Each structure exceeded the proposed cap discussed by regulators and lawmakers.
The concentration reflected early market development in South Korea’s digital asset industry. Exchanges grew rapidly during retail trading booms and attracted strategic investors. Large ownership stakes helped founders maintain operational control while expanding liquidity.
Crypto News: Legislative Debate and Industry Concerns
Herald Economy reported that lawmakers still needed to introduce the proposal formally in the National Assembly. Officials discussed the framework internally but had not named a bill sponsor. The passage could face resistance during legislative debate.
Some lawmakers questioned whether ownership restrictions aligned with global regulatory practice. Several members of the ruling party expressed concern over limiting investment in digital asset platforms. Political negotiations could determine whether the proposal advances to a vote.
Industry participants also reacted cautiously to the plan. An exchange insider warned that the measure could influence market competition and business development. The individual told the outlet that similar ownership limits rarely appeared in other jurisdictions.
That reaction reflected wider concerns within the digital asset sector. Operators argued that strict ownership caps might raise barriers for new entrants seeking funding. Investors could hesitate to commit capital if ownership limits constrain governance influence.
Crypto News: Korea Expands Oversight of Virtual Asset Firms
South Korea expanded regulatory oversight of digital asset businesses earlier this year. National Assembly records showed lawmakers approved new licensing rules for virtual asset service providers in late January. The framework strengthened eligibility checks for executives and large shareholders.
Authorities gained broader investigative authority under the revised framework. Regulators could review potential violations tied to drug trafficking, tax evasion, and serious economic crimes. The policy aimed to tighten oversight after several high-profile industry failures.
Further legislative work followed in February. Democratic Party lawmaker Kim Seung-won announced plans to draft amendments covering investment advice disclosure requirements. The measure targeted individuals who publicly promote financial products or virtual assets.
These initiatives signaled broader attempts to regulate investor influence and market behavior. South Korea’s government sought stricter compliance standards across exchanges and trading platforms. Officials argued the framework would strengthen consumer protection in the digital asset sector.
Lawmakers still needed to determine how the ownership cap proposal would interact with existing rules. The debate would shape how regulators balance investor oversight with industry growth.
Parliament discussions will likely determine the proposal’s next milestone. Legislators must introduce the bill before committee review begins. The timeline of that process will determine when exchanges start adjusting shareholder structures.