South Korea’s government and the ruling Democratic Party are discussing a proposal that would cap major shareholder ownership in local crypto exchanges at 20%. New businesses may be allowed to go up to 34%. Under the plan being discussed, exchanges would have three years to comply, while smaller platforms could receive an additional three-year grace period.
Current ownership structures sit well above the proposed threshold
The proposal emerged from talks between the Democratic Party’s digital asset task force and the Financial Services Commission, reflecting concern over concentrated control and market influence in the exchange sector. The challenge is obvious: many of the country’s main trading venues already exceed the proposed cap by a wide margin. Upbit chairman Song Chi-hyung holds 25.52% of the parent company. Bithumb Holdings controls about 73.56% of Bithumb. Coinone chairman Cha Myung-hoon owns 53.44%. Mirae Asset Consulting is expected to hold 92.06% of Korbit, and Binance controls roughly 67.45% of GOPAX.
The issue matters most at the top of the market. Upbit and Bithumb together account for about 90% of South Korea’s crypto trading market, so any legal cap would hit the most influential exchanges first. If enacted, large shareholders would likely need to reduce their stakes through share sales or corporate restructuring.
Lawmakers and industry voices warn about market side effects
The measure is still in the discussion phase and would need to pass South Korea’s legislative process before taking effect. Even within the ruling party, some lawmakers are concerned that ownership limits could weaken competition in a fast-moving technology sector. Industry criticism has been sharper. One insider said the idea is unprecedented globally and has low consistency with international practice, adding that excessive implementation could restrict competition, slow innovation, and strengthen barriers to entry.
That leaves a clear split in the debate. Supporters are focused on fairer governance and transparency. Critics are focused on whether the rule would curb market dynamism while trying to protect users.
Ownership limits are part of a wider regulatory push
The proposed cap does not stand alone. In January, South Korea’s National Assembly revised licensing standards for crypto exchanges, expanding background checks on executives and major shareholders. Authorities are able to investigate serious offenses, including drug trafficking, tax evasion, and other major financial crimes.
Another planned change comes from Democratic Party lawmaker Kim Seung-won, who wants financial regulations revised so that advisors must disclose conflicts of interest when recommending crypto and other financial products to clients. Taken together, the latest discussions show South Korea extending oversight across exchange ownership, licensing scrutiny, and disclosure duties for investment advice.