South Korea Regulator Endorses Ownership Caps for Crypto Exchanges

The head of South Korea’s Financial Services Commission has publicly limits on how much crypto platforms can own, saying that they should be treated as public infrastructure under new laws. The Digital Asset Basic Act includes this idea, which aims to limit concentrated power despite industry opposition.

What the Regulator Says About Caps

Lee Eog-weon, the head of South Korea’s Financial Services Commission (FSC), said that regulated should no longer be viewn as regular private organizations, but as businesses that provide public services. 

He said they need governance standards similar to those for securities markets, such as ownership restrictions for significant shareholders at 15% to 20%. Lee’s comments, reported by , are the strongest support for the caps from regulators so far. The FSC is looking into the plan, although platform operators and members of the ruling Democratic Party have raised reservations.

Change in Policy to Permission

Earlier this month, the National Assembly a policy coordination document that included the ownership cap. It framed platforms as “core infrastructure” for the digital asset market, where concentrated ownership may threaten integrity.

platforms would move from a three-year notice renewal scheme to a more permanent authorization system with tougher appropriateness evaluations. Lee stressed the need to align the laws governing platforms more closely with those governing and alternative trading systems as their roles change.

Resistance and Impact on the Industry

Domestic platforms have said that caps might destroy current systems. Dunamu, which runs Upbit, says that its Chairman, Song Chi-hyung, and his family own more than 28% of the company’s shares. Coinone founder Cha Myung-hoon owns a 53% majority interest.

If this law goes into effect, it could force large companies like , Bithumb, Coinone, and Korbit to reorganize, potentially disrupting mergers like Naver’s with Dunamu or Mirae Asset’s agreement with Korbit.

A Longer Timeline for Legislation

Before the Lunar New Year on February 17, lawmakers want to pass the Digital Asset Basic Act. This is later than delays due to difficultys with regulating stablecoins. They decided that stablecoin issuers must have at least 5 billion won ($3.7 million) in capital, but there is still disagreement over shareholder caps, which need to be reviewed by a committee and approved by the National Assembly.

Seoul’s aim of strong governance is evident in the measure, which would extend rules, such as the Travel Rule, to smaller transfers and apply them to crypto platforms with 11 million members.