South Korea’s Financial Services Commission is imposing crypto exchange ownership restrictions under the Digital Asset Framework Act, capping individual voting shares at 15-20% for major platforms serving over 11 million users. Exchanges like Upbit, Bithumb, Coinone, and Korbit are classified as core infrastructure, forcing owners above the limit to sell excess shares and reduce concentrated control.
-
South Korea caps crypto exchange ownership at 15-20% to prevent excessive control by founders.
-
Major exchanges like Upbit and Bithumb must comply, potentially selling 5-73% of stakes.
-
Regulations aim to protect consumers but raise concerns over market stability and property rights, per National Assembly documents reported by KBS.
South Korea crypto exchange ownership restrictions limit shares to 15-20%, forcing sales at Upbit, Bithumb. Discover impacts on market leaders and regulations. Stay informed on global crypto policy shifts today.
What are South Korea’s crypto exchange ownership restrictions?
South Korea’s crypto exchange ownership restrictions, outlined in the Digital Asset Framework Act, cap individual voting shares in major exchanges at 15% to 20%. The Financial Services Commission (FSC) classifies platforms serving more than 11 million users—such as Upbit, Bithumb, Coinone, and Korbit—as critical infrastructure for virtual asset distribution. Owners exceeding these limits must divest shares to comply, addressing concerns over concentrated control and profit distribution.
How will these restrictions affect major exchange owners like those at Upbit and Bithumb?
The FSC’s proposal builds on existing Capital Market Act rules, which limit ownership to 15% but allow up to 30% exceptions with approval. Documents from the National Assembly, obtained by KBS, highlight that a small number of founders and shareholders currently exercise excessive operational control. The FSC notes that huge operating profits, primarily from fees, are concentrated among specific individuals, prompting these measures for fairer governance.
For Upbit, operated by Dunamu, Chairman Song Chi-hyung holds about 25% of shares. Compliance would require selling 5-10% of his stake. Dunamu’s ongoing merger discussions with Naver Financial, as reported by Cryptopolitan, now face uncertainty due to these rules acting as a significant variable.
Bithumb Holdings owns 73% of Bithumb exchange shares, necessitating a sale of over half its stake. This could alter company control and operations fundamentally. Coinone’s Chairman Cha Myung-hoon, with 54% ownership, would need to divest more than 34% to meet the caps.
Cryptocurrency industry representatives criticize the measures as overregulation, arguing they infringe on property rights and hinder business growth while failing to enhance consumer protection. Concerns include potential share price drops from mass selloffs, challenges in finding buyers, and unclear rules on foreign investors despite interest from global firms.
Frequently Asked Questions
What triggers South Korea’s crypto exchange ownership restrictions for platforms like Upbit?
Exchanges serving over 11 million users are deemed core infrastructure by the FSC, applying restrictions under the Digital Asset Framework Act. Owners must reduce voting shares to 15-20%, selling excess to mitigate risks of concentrated control and uneven profit distribution, as detailed in National Assembly documents.
Will South Korea’s crypto regulations impact stablecoin issuance in 2026?
South Korea’s crypto framework faces delays amid stablecoin debates, with the Bank of Korea mandating consortium structures where banks hold at least 51% stake for stability and oversight. This complements ownership caps, ensuring robust regulatory control over virtual assets.
Key Takeaways
- Ownership Caps at 15-20%: Targets major exchanges to curb founder dominance and profit concentration.
- Forced Share Sales: Upbit’s leader sells 5-10%, Bithumb over 50%, reshaping control structures.
- Market Risks: Potential price drops and buyer shortages; monitor for foreign investment clarity.
Conclusion
South Korea’s crypto exchange ownership restrictions under the Digital Asset Framework Act represent a pivotal shift toward decentralized control in the nation’s dominant platforms like Upbit and Bithumb. While aimed at enhancing market integrity and consumer safeguards, as emphasized by the Financial Services Commission, they spark debates on regulatory overreach and economic fallout. As political scrutiny intensifies—evident in recent controversies involving figures like Democratic Party leader Kim Byung-ki—industry stakeholders must prepare for implementation. Investors and operators should track FSC updates closely for opportunities in this evolving landscape, positioning for long-term stability in South Korea’s vibrant crypto sector.
The Financial Services Commission is advancing these reforms amid broader legislative progress, including stablecoin guidelines from the Bank of Korea. Industry pushback underscores tensions between innovation and oversight, yet the framework seeks to foster sustainable growth. With exchanges handling vast user bases and transaction volumes, these changes could set precedents for global virtual asset regulation.
According to FSC statements, the goal is balanced governance: “There is an issue where a small number of founders and shareholders exercise excessive control over the operation of the exchange.” This professional approach aligns with international standards, promoting transparency without stifling competition. Minority shareholders and potential buyers will watch closely as divestitures unfold, potentially opening doors for diversified ownership.
South Korea’s crypto market, a leader in adoption, now navigates heightened political attention. Allegations against key figures highlight the need for impartial policy-making. As 2026 approaches, finalizing the Digital Asset Framework Act remains crucial for clarity on enforcement timelines and exceptions.
Source: https://en.coinotag.com/south-korea-plans-ownership-caps-on-upbit-bithumb-forcing-potential-share-sales
