South Korea is considering increasing its corporate cap on crypto investments

South Korean regulators are considering allowing listed companies and professional investment firms to invest as much as 10% of their equity capital in crypto, potentially doubling the previous limit of 5%.

The end of the nine-year ban of corporate crypto investment was announced on January 11 but excitement was short lived as industry players expressed disappointment in the allocation limit.

South Korean corporate crypto adviser Rich O told Cryptopolitan that while the move is seen as an improvement, he believes the cap would restrict corporate participation.

He said a 5% cap is impractical since price volatility and integrated cash and crypto accounting could push firms, unintentionally, over the limit.

“If the price of bitcoin rises significantly, compliance with the limit could force a sale. It’s not a very good rule, given that the defining characteristic of crypto is its volatility and constant price fluctuation.”

Rich O suspects authorities are fearful of publicly listed companies adopting a similar crypto playbook to MicroStrategy, which was rebranded to Strategy in 2025. The company has the world’s largest corporate holder of Bitcoin with a reported 650,000 bitcoins.

He anticipates the government will increase the cap over the coming years.

Crypto for corporate survival

Iris (Sungyoun) Park, is co-founder of South Korean web3 consultancy firm DELV and an attorney specializing in crypto. She told Cryptopolitan that there is tremendous corporate interest in diversifying portfolios with digital assets.

“Diversification is absolutely vital for the survival of companies these days. South Korea is experiencing ongoing disparities in the value of assets which you can see with house prices and gold skyrocketing while the price of bitcoin is not.”

She said a lot of companies in Korea are not only interested in holding crypto but also holding stablecoins for settling international trade.

“There is a common understanding that crypto is a way to keep up to date with global business.”

But Park doesn’t necessarily agree that authorities are in a rush to increase the equity cap as the country is moving to establish spot bitcoin ETF trading as part of its economic growth strategy.

Crypto infrastructure as a public good

Korean authorities are cautiously integrating crypto into the financial system. However, there are concerns of a growing asymmetry over ownership of crypto infrastructure. The government’s controversial plan to limit major shareholders’ stakes in crypto exchanges to between 15 to 20%.

The Financial Services Commission (FSC) have said a cap would help avoid conflicts of interest. FSC Chairman Eog Weon Lee explained that crypto exchanges have become a form of public infrastructure and the cap is needed to align governance standards on crypto exchanges in light of the public role they play.

“As crypto exchanges are now officially recognised as part of the financial system, we must create a governance structure that befits their status,” stressed Lee at a press conference on January 28.

Stablecoin turf war

Rich O stressed the move is not concerned with user protection but rather control over the future distribution of KRW stablecoins.  

“Government agencies don’t want only a few crypto exchanges, such as Upbit and Bithumb, to have major control over the distribution of upcoming KRW stablecoins.”

He said the policy is an attempt to weaken the influence of major shareholders.

“They want to diversify ownership by breaking it into smaller shareholders, making crypto exchanges easier to negotiate with or control,” said Rich O.

The proposal could force the co-founder of Dunamu and operator of Korea’s largest crypto exchange, Chi Hyung Song, to sell a 10% stake of his existing 25% ownership of Dunamu which equates to some 3 trillion KRW.

The ownership cap could also thwart South Korean internet giant Naver’s plans to acquire Dunamu which would see it take control of 100% of Dunamu’s shares.

Ownership limits defy global norms

The shareholder cap has attracted fierce criticism from the Digital Asset eXchange Alliance (DAXA), which represents South Korea’s five largest cryptocurrency exchanges. They said the restriction would hinder the growth of the industry.

At Korea’s National Assembly, a group of scholars argued against the cap, describing it as “excessive” and globally unprecedented.

Professor Yoon Kyung Kim from Incheon National University said a diverse ownership base typically emerges as companies grow and raise capital, rather than being imposed at the outset.

Innovation is at stake

She said artificially ordering shareholder equity restrictions could increase management uncertainty, delay large investment decisions, and ultimately weaken national competitiveness and Korea’s fintech innovation ecosystem. 

Professor Cheol Woo Moon from Sungkyunkwan University added that forcing shareholders to sell equity could amount to an infringement of the rights of private entrepreneurs and could face legal disputes and constitutional appeals.

Corporate crypto analyst Rich O doesn’t believe the proposal will gain momentum. But FSC Chairperson Eok Won Lee said he was committed to implementing the crypto exchange shareholder cap.

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