South Korea proposes ownership caps to curb influence over major crypto exchanges

South Korea’s financial regulator has proposed strict limits on the holdings of major shareholders in the country’s biggest virtual asset exchanges, a move that could reshape governance at platforms such as Upbit, Bithumb, Coinone and Korbit.

According to a report by KBS, the Financial Services Commission (FSC) is considering capping ownership stakes for “core infrastructure” exchanges at roughly 15–20%. The proposal, modelled in part on limits in the capital markets’ alternative trading system that bar single entities from owning more than 15% of voting shares, is aimed at preventing concentrated control by a small group of founders and reducing the risk that any one stakeholder could exert outsized influence over platform operations.

The FSC framed the measure as part of a broader regulatory push to balance innovation with investor protection. “We are developing a two-track approach for token regulation to provide a regulatory framework that supports innovation while ensuring investor protection,” the FSC said.

Industry participants have reacted cautiously. Exchange executives and other stakeholders have warned that strict share caps could amount to regulatory overreach and might hinder investment and innovation in an industry that has positioned South Korea as a leading crypto hub. At the same time, advocates of tighter oversight argue that decentralising ownership would strengthen governance and reduce single-point failures after a series of exchange hacks and management controversies around the world.

The ownership cap sits alongside other recent measures that tighten oversight of crypto businesses. The FSC has already extended the anti-money-laundering “travel rule” to cover all virtual asset transfers, including transactions under 1 million won, requiring virtual asset service providers to share originator and beneficiary information for every transfer, the FSC said at an Anti-Money Laundering Day event on 28 November 2025. Regulators have also moved to bar dealings with high-risk foreign exchanges and to subject local platforms to more rigorous financial and criminal-record checks.

Regulatory costs for exchanges are rising as well. Industry reporting shows the FSC will collect supervisory fees from regulated operators based on prior-year operating revenue , a charge set in the revised Enforcement Decree of the Act on the Establishment of the Financial Services Commission , with estimates of around 300 million won per operator in some cases. The measure formalises the FSC’s intention to fund expanded inspections and oversight capacities.

Other fresh rules from the FSC include lending and consumer-protection limits on centralised exchange products. The regulator has issued guidance capping crypto lending interest rates at 20% and restricting lending to top tokens by market capitalisation that meet cross-listing standards, according to FSC guidance. Separately, the commission has signalled liberalisation in other financial areas: its 2025 work report raised the allowable stake financial holding companies may take in fintech firms to 15%, up from 5%, and said it would consider gradual measures such as permitting corporate won-denominated virtual asset accounts.

Taken together, the package reflects a regulatory philosophy that seeks to tighten control over how crypto platforms operate while selectively opening other channels for institutional participation. Industry observers say the shareholding cap is the most politically sensitive element because it would directly force ownership changes at high-profile firms. For example, should the proposal become law, major figures such as Dunamu chairman Song Ji-heung might be required to reduce their stakes to comply.

Regulatory advocates argue the measures are a response to the market’s volatility and past failures. Market-data snapshots cited by exchanges show continued price swings and declining trading volumes for major tokens, which regulators say underscore the need for stronger consumer protections and more resilient governance structures.

If adopted, the ownership limit will be enforced as part of the FSC’s ongoing implementation of the Virtual Asset User Protection Act and related regulations. The commission has not yet published final rules or a timeline for enforcement, and key exchange executives have not issued formal public responses to the ownership proposal. Industry groups and affected companies are likely to engage with the FSC during the rulemaking process, while some may challenge the specifics or seek transitional arrangements to avoid abrupt sell-downs that could unsettle markets.

The proposal underlines a broader global trend: regulators are increasingly treating major crypto platforms as financial market infrastructure and subjecting them to rules designed to limit concentration, improve transparency and reduce systemic risk. South Korea’s approach combines supervisory fees, expanded AML obligations, product-level limits and potential ownership caps to create a comprehensive , and contested , framework for the sector’s next phase of growth.