South Korea’s government and ruling party have reportedly agreed on a plan to limit the ownership stake of major shareholders in domestic crypto exchanges to 20%.
According to a report on Wednesday by local media Herald Economy, a working group of the Democratic Party of Korea and the Financial Services Commission (FSC) agreed to set a 20% stake limit.
However, regulators can allow exemptions of up to 34% for new businesses through an executive order. According to the report, the minimum refers to the 33.3% threshold for vetoes of the Commerce Act at general meetings of shareholders.
According to the report, exchanges will have three years from the law’s implementation to adjust their ownership structures. Smaller exchanges may receive an additional three-year grace period. Larger platforms such as Upbit and Bithumb, which together control about 90% of the local market, are expected to reduce their major shareholder stakes within the first three years.
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Major Korean stock exchanges exceed proposed ownership limits
Current ownership levels in South Korea’s major stock exchanges exceed the proposed threshold. Upbit Chairman Song Chi-hyung holds about 25.52% of the shares, while Bithumb Holdings owns about 73.56% of Bithumb. Coinone Chairman Cha Myung-hoon controls about 53.44%, Mirae Asset Consulting holds about 92.06% of Korbit after the purchase, and Binance owns about 67.45% of GOPAX.
The proposal, which has been backed by regulators, faces a lengthy legislative process. A member of the National Assembly is expected to introduce the bill, although a sponsor has yet to be identified. The transition could be difficult, as some lawmakers, including members of the ruling party, have expressed concern about restricting ownership in the sector.
An industry insider warned that the measure could have wider implications for competition. “It is unprecedented worldwide and has low global relevance. If over-imposed, it could have serious negative consequences, such as limited competition, slowing innovation and strengthening barriers to entry,” they said.
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South Korea tightens crypto licensing rules
In late January, South Korea’s National Assembly approved changes to the country’s crypto licensing framework, introducing tougher entry requirements for virtual asset service providers (VASPs). The updated rules allow authorities to investigate executives and major shareholders for a wide range of potential violations, including drug trafficking, tax evasion, fair trade violations and serious economic crimes.
In February, Democratic Party Representative Kim Seung-won also announced plans to draft amendments to the Financial Trading and Investment Act and the Virtual Asset User Protection Act, which would require the disclosure of individuals who provide investment advice or encourage the trading of financial products or virtual assets.
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