What to Know
- South Korea plans to treat major crypto exchanges as “core infrastructure” due to their large user base.
- The government wants to limit how much control big shareholders have, capping ownership at 15–20%.
- The plan has sparked pushback from the industry and comes as wider crypto laws, especially around stablecoins face delays.
South Korea is preparing a major shake-up of its crypto industry. According to a report submitted to the National Assembly by the Financial Services Commission and obtained by local broadcaster KBS, the government plans to label large crypto exchanges as “core infrastructure” for digital asset trading. This label would apply to exchanges with around 11 million users, a description widely understood to refer to Upbit, Bithumb, Coinone, and Korbit.
The move is part of the government’s planned “Phase 2 Virtual Asset Act,” which focuses mainly on stablecoins and the wider legal structure of the crypto market.
Why The Change
The FSC said there is growing concern that a small number of founders and large shareholders have too much power over how exchanges operate. According to the commission, this has led to large profits, mainly from trading fees, being concentrated in the hands of a few individuals.
To address this, the FSC is proposing a new review system for major shareholders, similar to rules that already apply to some traditional trading platforms. Under the plan, no single major shareholder would be allowed to own more than 15% to 20% of an exchange. At present, Korea’s Capital Markets Act already limits ownership in alternative trading platforms to 15% of voting shares, although higher limits are sometimes allowed with special approval.
Big Exchanges feel the Impact
At Upbit, the country’s largest exchange, the operator Dunamu could be directly affected. Dunamu’s chairman, Song Chi-hyung, currently owns about 25% of the company. Under the proposed rules, he may need to sell up to 10% of his stake.
This is especially important because Dunamu is reportedly in the middle of a major stock-based deal with Naver Financial, which could reshape its future ownership. Bithumb may face even bigger pressure. Bithumb Holdings currently owns around 73% of the exchange. If the government enforces ownership limits, the holding company could be forced to sell a large portion of its shares, raising questions about how the exchange would be managed going forward. Coinone is in a similar position. Its chairman, Cha Myung-hoon, holds about 54% of the company. To meet the proposed rules, he would need to sell at least 34%, which could weaken his control over the business.
Industry Pushback
Not everyone in the crypto industry is happy with the plan. Some critics argue that the government is going too far and stepping beyond basic market rules. They warn that forcing founders to sell large stakes could harm property rights and create instability at exchanges that currently operate without major issues.
These concerns are growing at a time when South Korea’s broader crypto law is already facing delays. Earlier today, according to a report by Yonhap News Agency, the Financial Services Commission wants stablecoin issuers to keep their reserves in safe assets like bank deposits or government bonds. Issuers would also be required to place 100% of these reserves with trusted custodians such as banks. The goal is to make sure that if a stablecoin company fails, losses do not spread to users.
However, progress has stalled because regulators cannot agree on who should be allowed to issue stablecoins. The Bank of Korea wants stablecoins to be issued only by groups where banks hold at least 51% ownership, while the FSC argues this would block tech firms and slow innovation. The two sides also disagree on whether a new approval committee is needed, adding to the delay. In the meantime, the ruling party is working on its own draft law, and interest in a local stablecoin continues to grow, especially after President Lee Jae Myung backed the idea of a won-based stablecoin.
Final Thoughts
While the government says its goal is to protect users and reduce risk in a fast-growing market, the combination of strict ownership limits and delayed legislation has created uncertainty. Crypto companies, investors, and users are now watching closely to see whether these plans move forward as proposed or face pushback and revisions before becoming law.
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