- South Korea‘s government and ruling party have agreed to propose a 20% ownership cap for major shareholders of local crypto exchanges.
- Major platforms like Upbit and Bithumb, whose current ownership structures exceed the cap, would have three years to comply.
- The contentious proposal faces a tough legislative process amid warnings it could stifle competition and innovation in the market.
South Korea’s ruling party and financial regulators have agreed to a groundbreaking plan that would cap major ownership stakes in domestic cryptocurrency exchanges at 20%. This move, reported Wednesday, aims to decentralize control within the country’s highly concentrated digital asset market. However, new market entrants may receive special permission to hold up to a 34% stake.
Consequently, dominant players controlling over 90% of the national market, such as Upbit and Bithumb, face a significant reshaping of their corporate structures. According to local media reports, these large exchanges would have a three-year grace period from the law’s enforcement to reduce major shareholder stakes. Smaller platforms could potentially receive an additional three-year extension to meet the new requirements.
The proposed cap is well below current ownership levels across the industry. For instance, Bithumb Holdings owns roughly 73.56% of Bithumb, while Binance controls about 67.45% of GOPAX. Nevertheless, the policy faces a challenging legislative journey, as some lawmakers have expressed concerns about restricting ownership. An industry insider warned the measure is “unprecedented worldwide” and could lead to limited competition and slowed innovation.
Meanwhile, this proposal follows a series of tighter regulations for the crypto sector. In late January, South Korea’s National Assembly approved stricter licensing rules that allow deeper scrutiny of executives’ backgrounds. Lawmakers are also drafting amendments to mandate disclosure from individuals who provide crypto investment advice, data shows.
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