In an effort to bolster the integrity of the crypto ecosystem, South Korea top financial regulator has proposed limiting shareholdings in local exchanges. Financial Services Commission (FSC) Chairman Lee Eog-weon emphasized this Wednesday the need to establish ownership caps between 15% and 20% for major shareholders, aiming to align the sector with public financial infrastructure standards.
This measure, which will be integrated into the upcoming Digital Asset Basic Act, comes as platforms transition toward a permanent authorization system. According to the regulator, this transition means that exchanges will no longer be treated as simple private companies, assuming greater responsibility in digital asset management under supervision similar to that governing traditional securities markets.
However, the announcement has sparked strong resistance among industry leaders, who consider these restrictions excessive. Local giants like Upbit and Coinone, whose founders retain holdings that far exceed the proposed limit, would be forced to execute massive capital divestments, which could drastically alter the command structure and operational stability of the country’s largest platforms.
The challenge of decentralizing control in the South Korean market
the South Korean regulator’s proposal aims to mitigate conflicts of interest arising from an excessive concentration of power in the hands of a few founders. By implementing these caps, the FSC hopes that digital asset management will become more transparent and less vulnerable to unilateral decisions that compromise user safety. Furthermore, the body argues that the crypto market has reached a systemic relevance that justifies strict governance regulations.
On the other hand, critics of the project, including members of the ruling party, warn that South Korea could fall out of step with global trends. They argue that imposing forced divestments on sector pioneers could discourage innovation and local technological development, favoring foreign competitors operating under less restrictive frameworks. However, the regulator maintains that investor protection must prevail over private interests.
How will this reform impact the competitiveness of exchanges?
Uncertainty over the future of the law has raised doubts about whether platforms will be able to maintain their current growth pace. If the 20% limit is approved, the chairman of Dunamu, Upbit’s operator, would have to divest a significant portion of his shares, transforming the internal governance of the country’s most dominant company. In this way, cryptocurrency in South Korea would enter a phase of institutional maturity marked by much deeper state control.
In the near future, negotiations between the government and industry stakeholders will be decisive in defining the final permitted ownership percentages. Meanwhile, the market cautiously observes how blockchain and its intermediaries are being forced into a public utility model, this being a paradigm shift that could redefine the financial map of the Asian region in the coming years.
