Upbit headquarters in Seoul / Yonhap
The country’s cryptocurrency industry is pushing back against the government’s plan to cap ownership stakes of major shareholders in domestic crypto exchanges, market watchers said Tuesday.
This sets the stage for a political clash as main opposition party lawmakers prepare to hear the concerns of the crypto exchanges and discuss the issue amid legislation of the digital asset bill.
The Financial Services Commission (FSC) seeks to cap the ownership stake limit to 20 percent, a threshold applied to alternative trading systems (ATS) under the laws governing capital markets. It reflects concerns that a small number of founders and major shareholders could exert excessive control over exchange operations, while large fee revenues are oriented toward a few individuals.
However, the industry argues that this forced ownership restructuring would undermine management accountability at the expense of Korea’s competitiveness in the global digital asset market.
Whether the main opposition People Power Party (PPP) will side with the exchanges during Wednesday’s policy conference will determine the scope of its clash with the ruling Democratic Party of Korea (DPK).
According to the crypto industry, the Digital Asset Exchange Alliance (DAXA) and representatives from the country’s five major crypto exchanges — Upbit, Bithumb, Coinone, Korbit and GOPAX — issued a statement Tuesday protesting that the FSC plan would stunt the development of Korea’s digital asset industry.
“The FSC measure could push users to opt for offshore exchanges and undermine accountability involving customer asset protection, not to mention heightening uncertainty across the startup and venture capital ecosystem,” DAXA said. “Regulations that undermine property rights and market principles should be reconsidered.”
Central to their collective concern is that the FSC measure would require the exchanges to sell off a significant number of shares to meet the 20 percent cap.
The exchanges’ respective operators currently hold between 25 percent and 73 or more percent in stakes.
However, the FSC maintains that the cap is needed, since the exchanges now function as critical financial infrastructure and should therefore be subject to stricter governance standards.
“Crypto exchanges play a public role similar to financial market infrastructure,” the FSC said. “Stringent rules should be applied to improve transparency and governance.”
On Wednesday, the PPP’s special committee on stock and digital asset value-up will hold a policy meeting with DAXA members and stakeholders at the National Assembly.
Lawmakers from the National Assembly’s National Policy Committee, including committee member Kim Sang-hoon, chair of the PPP task force, are expected to attend. The meeting will focus on ownership caps and other industry concerns related to the digital asset legislation.
