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South Korea plans on limiting the ownership of major crypto-exchanges to 20%.
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After the law is finalized and the law is implemented, exchanges will have three years to meet their new ownership limits.
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The FSC has agreed that certain exceptions will allow for up to 34% ownership.
South Korean officials are reportedly limiting the amount of equity that major shareholders can own in local crypto exchanges to 20%. If the rule is implemented, major players such as Upbit and Bithumb may be forced to restructure.
This is part the long-awaited Digital Asset Basic Act of the country, which is a comprehensive legal framework. Its main goals include tightening oversight, protecting investors, and bringing order to one Asia’s busiest cryptocurrency markets.
Local reports claim that regulators from the Financial Services Commission and lawmakers from the ruling party’s Digital Asset Task Force reached an agreement on the cap following recent talks.
After the law is finalized and the law is implemented, exchanges will have three years to comply with the new ownership limits. Smaller platforms may get an additional three years to make this change.
If the rule is passed, companies with large ownership stakes would be forced to sell or restructure their business to stay under the 20% cap.
The regulation aims at reducing risks associated with too much control in a single place and bringing crypto exchange governance in line with what is expected in traditional finance.
FSC has also agreed to allow up 34% ownership in certain circumstances. This rule applies only to new business owners, not those already in place.
Industry Reactions
The industry’s reaction has been mixed. Local exchanges and business groups have previously resisted similar ideas, arguing that forcing owners to cap their stakes would interfere with property rights, weaken governance, and harm growth, especially since South Korean platforms already compete against foreign platforms.
In January, DAXA – the group that represents South Korea’s top five exchanges – including Upbit, Bithumb, and Bithumb – reacted strongly to the announcement.
DAXA warned against capping the amount that owners can hold, as it would seriously slow the growth of South Korea’s crypto industry. The group said that forcing private companies into changing their ownership structure undermines a sector that is still finding its feet.
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