Korea’s Financial Regulator Weighs Ownership Caps for Crypto Exchanges

South Korea’s prime monetary regulator is urgent forward with plans to restrict the possession stakes of main shareholders in home crypto exchanges, signaling a harder strategy to governance because the business’s function within the monetary system expands.

Financial Services Commission (FSC) Chairman Lee Eog-weon stated Wednesday that imposing possession caps is critical to deliver governance requirements in step with the rising public significance of digital asset exchanges, according to a report by the Korea Times.

His remarks counsel the regulator intends to maneuver ahead regardless of pushback from business gamers and issues raised throughout the ruling Democratic Party of Korea.

Korea Regulator Reviews 15–20% Ownership Cap for Crypto Exchanges

The FSC is reviewing a proposal to cap controlling shareholders’ stakes at round 15% to twenty%, per the report.

The provision is anticipated to be included within the deliberate Digital Asset Basic Act, typically described because the second section of South Korea’s digital asset laws.

Lee stated current legal guidelines, together with these governing anti-money laundering and investor safety, are restricted in scope and don’t handle broader governance points.

The new invoice, in contrast, is designed to ascertain a complete authorized framework overlaying the total digital asset ecosystem, from service suppliers to market contributors.

“Under the present system, digital asset exchanges function below a notification system that requires renewal each three years,” Lee stated at a media briefing.

“The proposed shift to an authorization system would successfully grant exchanges everlasting working standing.”

Once licensed below such a system, exchanges would now not be handled purely as non-public companies, Lee added, however would tackle traits nearer to public monetary infrastructure.

He warned that extreme focus of possession might heighten conflicts of curiosity and weaken market integrity.

“Securities exchanges and different buying and selling programs are already topic to possession limits, making it affordable to use related requirements to digital asset platforms,” Lee stated.

Korean Crypto Exchanges Push Back Against Proposed Ownership Caps

The proposal has drawn sharp criticism from the industry.

A joint council representing main home exchanges, together with Upbit, Bithumb and Coinone, stated earlier that possession caps might undermine the event of South Korea’s digital asset sector.

At Dunamu, the operator of Upbit, Chair Song Chi-hyung and associated events management greater than 28% of the corporate. Coinone founder Cha Myung-hoon holds roughly 53%.

If the proposed cap is enacted, each can be required to divest important parts of their stakes.

The ruling get together has additionally voiced reservations, arguing that related possession limits are uncommon internationally and will depart South Korea out of step with world regulatory tendencies.

Lee acknowledged the issues and stated discussions with lawmakers are ongoing.

Last month, South Korea revealed that it’s preparing one of its most aggressive crackdowns on cryptocurrency-related monetary crime by increasing its journey rule necessities.

The new threshold covers transactions below 1 million received ($680), which till now allowed customers to bypass identification checks by breaking transfers into smaller quantities.

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