South Korean authorities and the ruling party have agreed on a 20% ownership cap for “major shareholders” in crypto and virtual asset exchanges, with a three-year implementation delay.
From a firm offer to compromise
After months of disagreement, the Financial Services Commission (FSC) and the Democratic Party’s task force on digital assets have finally agreed on a 20% cap for major shareholders, the Core Herald reports.
South Korea’s 20% minimum is the culmination of a long-running push by the FSC, the top financial regulator, to curb founder control of the country’s biggest crypto exchanges. Regulators initially proposed a tougher range of 15-20% for major shareholders in leading platforms, a proposal that sparked outrage and strong industry opposition. The approval was led by the Digital Asset Exchange Alliance (DAXA), a self-regulatory body representing five major exchanges in South Korea, including, of course, Upbit and Bithumb.
Terms of contract
The agreement on 20 percent and a generous grace period appears to be an attempt to find a middle ground and de-escalate tensions. The FSC and the ruling party have approved a three-year grace period for the implementation of the capital stock limit, giving Upbit and Bithumb, which together control about 90% of the domestic market, some breathing room to reduce their stake to reach the new limit.
Smaller exchanges that do not meet the estimated 20% market share threshold, such as Coinone, Korbit, and GOPAX, will have an even longer runway. South Korean authorities have agreed to give them an additional three-year grace period, giving these platforms a total of up to six years to prepare to fully comply with the threshold.
Exceptions
The FSC has also created narrow exceptions through an enforcement decision that allows up to 34% of shares only for new businesses and not for existing exchanges. According to The Korea Herald, this minimum reflects the 33.3% veto line in the Commerce Act for general meetings of shareholders, and allows new qualified investors to block power without regaining full control.
Final details on the Digital Assets Act
According to Hankyung, the ruling party’s policy committee is expected to determine the final details after a closed-door meeting with the Financial Services Commission on the morning of the 5th. The fee will be bundled into the broader Basic Digital Assets Act, an umbrella project that covers a wide range of crypto policy measures, from stablecoin regulations to crypto exchange funds.
However, the passage of the bill is far from guaranteed. The Korea Herald notes that not only is the opposition party backing down, but some lawmakers are also objecting to strict limits on major shareholders’ holdings and doubting whether it will even clear the National Assembly in its current form.
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