Regulatory Proposal and Initial Concerns
South Korean cryptocurrency exchanges are facing proposed limits on major shareholders’ equity stakes, which cap ownership at around 15 to 20%. The controversial policy is now seeing some resistance among the country’s business academics. According to South Korean regulators, the main goal of the policy is to prevent the excessive concentration of control, profits, and influence in the hands of a few individuals or entities, thereby reducing potential governance risks. The plan to treat crypto exchanges more like public financial infrastructure, such as stock exchanges and banks, is still under consideration by the country’s financial authorities.
Academic Resistance to Equity Caps
The academic class in South Korea has expressed resistance to the idea of capping equity in crypto companies at 20%, claiming there is a high possibility that the policy infringes on property rights and may also be unconstitutional. They argue that financing and equity dispersion can be achieved simultaneously by strengthening the screening process of major shareholders and creating a foundation for an initial public offering (IPO). They shared these thoughts at an event hosted by the Democratic Party of Korea’s Digital Asset Task Force (TF) and organized by the Korea Fintech Industry Association.
Artificially forcing majority shareholders’ shares in virtual asset exchanges is a violation of property rights and is unconstitutional.
Moon Cheol-woo, a professor at Sungkyunkwan University’s Business School, made this statement at a discussion session on “Direction of institutionalizing stablecoin issuance and transaction infrastructure” held at the National Assembly building in Yeouido, Seoul, on January 16. He cited examples of the shareholding structures of overseas exchanges like Binance and Coinbase, pointing out how they are based on the founders’ high shareholding ratio.
The discussion came after the Financial Services Commission documented the “Measure for Coordinating Key Issues of the Framework Act on Digital Assets (Second Stage Legislation),” which limits the majority shareholders’ stake in exchanges to 15-20% and delivered it to the offices of some members of the National Assembly’s Political Affairs Committee.
Rationale Behind South Korea's Proposed Limits
According to reports, the purpose of the document was to introduce a major shareholder eligibility screening similar to the Alternative Capital Market Exchange (ATS). Professor Moon is convinced that what the Financial Services Commission has planned does not align with the global trend in terms of responsible corporate management and that forcibly restricting shares to a certain percentage is not something that should be allowed to happen in Korea, a developed country, in 2026.
Professor Kim Yun-kyung of Incheon National University’s Department of Northeast Asian and International Trade, who attended the event, echoed Moon’s sentiments, saying, “I sympathize with the problem of governance regulations, but there are concerns that the means are excessive. This could also be expanded as a basis for regulation of shareholding ratios in similar innovative financial industries.”
Professor Kim urged all parties to instead consider strengthening innovation incentives and the growth of the startup and venture ecosystem together. “We must improve the responsible management system, board functions, and internal control to ensure practical operation,” he said. As an alternative, sentiments leaned towards the establishment of a foundation for a long-term autonomous initial public offering (IPO), along with the screening of major shareholders’ qualifications.
Professor Kim explained, “The limitations of the current virtual asset exchange due to regulatory gaps require systematic discipline on governance,” while adding that, “Even in corporate governance policies, there are conflicting perceptions regarding the shareholding ratio.” He pointed out that “There is a plan to specify major shareholder eligibility screening, behavior regulation, and board organization in the Digital Assets Basic Act (Phase 2 bill).”
According to him, as the company grows, there is a need to pursue an IPO that can not only raise funds but also distribute shares. He also cited Coinbase as an example, highlighting how the American virtual asset exchange ensures the founder’s voting rights are maintained via differential voting rights even after the IPO.
Should the policy be implemented, almost none of the major Korean exchanges would go unscathed, as a majority of their shareholders currently exceed 20%. To abide by the new standard, if it becomes one, those players would be forced to sell significant amounts of shares, potentially worth trillions of KRW in some cases, and it would also disrupt ongoing M&A or investment plans.
FSC Eases Ban on Corporate Crypto Investments
The FSC in South Korea recently lifted a ban that had been in place for the past nine years due to concerns over speculation and money laundering. There are now guidelines that allow listed companies and professional investors to allocate up to 5% of their equity capital annually to digital assets. Those guidelines, which are a part of the government’s broader 2026 Economic Growth Strategy, require investments to be restricted to the top 20 cryptocurrencies by market cap and insist that trading only occur on one of the country’s five major regulated exchanges.
Unfortunately, the 5% cap is also facing resistance, this time not from academia but from financial industry insiders, market participants, and observers who have tagged it too conservative. The FSC has justified the limit as a risk mitigation measure, and while it has not publicly responded to the critics, it has claimed the measure is yet to be finalized.