South Korea's authorities plan to cap major shareholder stakes at 15-20% for the country's four largest crypto exchanges
The South Korean government is imposing strict ownership restrictions on its largest cryptocurrency exchanges under the Digital Asset Framework Act.
The Financial Services Commission plans to impose a limit on the shares cryptocurrency exchange owners can have, forcing those who already own above the proposed limit to sell off their shares.
South Korea plans to force crypto exchange owners to sell their shares
According to documents obtained by KBS from the National Assembly, the Financial Services Commission now classifies exchanges that serve over 11 million users as “core infrastructure” for virtual asset distribution. This classification applies to exchanges like Upbit, Bithumb, Coinone, and Korbit.
The South Korean Financial Services Commission is preparing new legislation that would cap individual ownership of voting shares between 15% and 20%. The current Capital Market Act regulations limit alternative exchange ownership to 15%, but allow exceptions of up to 30% only with the explicit approval of the Financial Services Commission or for public offering funds.
The Financial Services Commission stated that “there is an issue where a small number of founders and shareholders exercise excessive control over the operation of the exchange.” They also added that “huge operating profits such as fees are concentrated on specific individuals.”
What does this mean for current exchange owners?
Upbit operates through a company called Dunamu and holds the largest market share in the country. Chairman Song Chi-hyung currently owns about 25% of the company, meaning under the new rules, he would need to sell between 5-10% of his shares.
As reported by Cryptopolitan, Dunamu is currently pursuing a merger with Naver Financial through a comprehensive stock exchange, but the new ownership restrictions are “a big variable” in the deal’s completion.
Bithumb Holdings currently owns 73% of Bithumb exchange shares. Under the proposed regulations, the company will be forced to sell more than half of its stake in the company. Such a massive selloff could change who controls the company and how it operates.
Coinone’s Chairman Cha Myung-hoon holds 54% of the company, far exceeding any proposed limit. Meeting the new requirements would force him to sell off more than 34% of his holdings.
Cryptocurrency industry representatives argue that the government is overstepping reasonable market guidelines and implementing excessive regulation. They also argue that forcing owners to sell their stakes violates basic property rights.
Critics point out that the bill is intended to help crypto businesses grow and protect consumers, but this system will hurt both goals.
There’s also growing concern around what happens to the shares that owners must sell. If large amounts of exchange stock hit the market at once, it could drive down prices. Current minority shareholders might lose value in their investments. Finding buyers for such large stakes might also prove difficult.
The proposed rules also do not clearly explain whether foreign companies will be allowed to buy the shares despite several global crypto firms expressing interest in the Korean market.
In the meantime, South Korea heads into 2026 with its crypto regulation framework in knots. Although there is a wide consensus on the general framework of the legislation, the controversies regarding the issuance of stablecoins have slowed its completion. The Bank of Korea has assumed the role that, to secure the stability of operations and regulatory control, only consortium structures where banks have at least a 51% majority stake would be allowed to issue stablecoins.
The slowdown in legislation is accompanied by an increase in political attention to the crypto market in South Korea. Kim Byung-ki, the floor leader of the ruling Democratic Party, is under pressure to step down after he was accused of ordering the criticism of the largest crypto exchange in the country, Upbit. Meanwhile, his son got an internship at competitor Bithumb.
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