South Korea’s financial regulator and the ruling party have reached a tentative compromise to limit how much “major shareholders” can own on crypto exchanges — setting the cap at 20% and giving affected firms time to comply.
Why it matters
- The Financial Services Commission (FSC) has pushed for a limit on founder and large-shareholder control at major exchanges as part of wider efforts to strengthen governance in the crypto sector. The move targets the country’s dominant platforms, where concentrated ownership has long been a concern.
- Upbit and Bithumb, which together control roughly 90% of South Korea’s crypto trading volume, will be the most affected and must start trimming stakes if the rule is finalized.
Key points of the agreement
- Ownership ceiling: 20% for “major shareholders.” Regulators had earlier proposed a stricter 15–20% range, which drew strong industry pushback.
- Grace period: A three-year window before enforcement begins for the biggest exchanges, intended to ease the transition and defuse tensions between regulators and industry.
- Longer runway for smaller exchanges: Platforms that don’t meet the estimated 20% market-share threshold (examples include Coinone, Korbit and GOPAX) will get an additional three years — up to six years total — to comply.
- Narrow exception for new entrants: An enforcement decree would allow stakes up to about 34% for new businesses (not existing exchanges). That roughly mirrors the Commercial Act’s 33.3% veto threshold for shareholder meetings, effectively giving certain new investors the ability to block decisions without restoring full controlling power.
Industry reaction
- The initial proposal sparked fierce opposition, led by the Digital Asset Exchange Alliance (DAXA), which represents the five major exchanges. The consensus on 20% plus grace periods appears designed to strike a middle ground between regulatory reform and industry stability.
Next steps and political hurdles
- The ruling party’s policy committee plans to finalize details after a closed-door meeting with the FSC (reported by Hankyung). The ownership cap is expected to be folded into a broader Digital Assets Basic Act, which would also cover measures like stablecoin rules and crypto exchange-traded funds.
- Passage is not guaranteed: opposition lawmakers and even some within the legislature have pushed back against strict ownership limits, leaving the bill’s fate uncertain.
Bottom line
The tentative deal signals Seoul’s intent to curb concentrated control at major crypto exchanges while giving the market time to adjust. But political debate and final legislative wrangling will determine whether the 20% cap becomes law and how quickly it takes effect.
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