South Korea Eyes Ownership Caps for Crypto Exchange Shareholders

South Korea’s Financial Services Commission wants to cap crypto exchange ownership at 15% to 20% per shareholder. The move comes as part of the Digital Asset Basic Act, which aims to tighten control over the country’s wild crypto market that’s seen too many scandals lately.

FSC officials have been talking about these limits behind closed doors for weeks now, according to sources familiar with the discussions. The idea is pretty simple – prevent any single investor from gaining too much control over major exchanges like Upbit or Bithumb. Critics say it’ll kill innovation, but regulators don’t seem to care much about those complaints right now. They’re more worried about another exchange blowing up and taking investors’ money with it. The proposal is still early stage stuff, with no firm timeline yet.

Things got messy in 2023.

Multiple exchange hacks hit South Korean crypto traders hard, wiping out millions in investor funds and sparking angry protests outside government buildings. Fraud cases piled up too, with some smaller exchanges just disappearing overnight with customer deposits. That’s when authorities decided they needed to do something drastic to clean up the mess and restore confidence in digital asset trading.

Upbit and Bithumb control most of South Korea’s crypto trading volume between them, making them obvious targets for the new rules. Both companies declined to comment when reached, but industry insiders say they’re already scrambling to figure out how ownership restructuring might work. One senior executive at a major exchange said his company is “basically preparing for every possible scenario” because nobody knows exactly what the final rules will look like. The uncertainty is driving some investors crazy, with trading volumes dropping as people wait to see what happens next.

The Digital Asset Basic Act covers way more than just ownership caps. Anti-money laundering requirements will get stricter, customer protection rules will expand, and exchanges will face tougher compliance audits. The FSC plans to review the entire package later this year, but the ownership limits are getting the most attention from market participants right now.

“It’s about finding the right balance,” a senior FSC official said, requesting anonymity because discussions are still ongoing. The official added that preventing systemic risks is the main goal, not killing technological progress.

But finding that balance isn’t easy when you’re dealing with an industry that changes so fast. South Korea has already implemented mandatory exchange registration and stricter customer verification processes over the past few years. Those measures helped some, but problems keep popping up anyway, which is why regulators think they need even tougher rules now. This follows earlier reporting on Young Crypto Fraudster Gets 375-Year Prison.

Global crypto watchers are split on South Korea’s approach. Some see it as a smart way to prevent market manipulation and protect regular investors from getting burned. Others worry it’ll scare away international investment and make South Korean exchanges less competitive compared to platforms in countries with lighter regulation. The debate is getting pretty heated in crypto forums and industry conferences.

A Upbit spokesperson said on February 10, 2026, that the company is reviewing its shareholder structure to prepare for possible regulatory changes. The exchange wants to stay ahead of any new rules instead of scrambling to comply later. Bithumb is doing similar prep work, consulting with legal experts about what ownership caps might mean for their business model and operational flexibility.

South Korea’s National Assembly finance committee held hearings on February 12, 2026, to discuss the economic impact of the Digital Asset Basic Act. Lawmakers are trying to figure out if tighter regulation will help or hurt the country’s position in the global crypto market. Some assembly members think the caps are necessary to prevent another crisis, while others worry about pushing crypto businesses to friendlier countries like Singapore or Switzerland.

Banks are nervous too. KB Kookmin Bank and other major lenders that provide services to crypto exchanges met with FSC officials on February 13, 2026, to voice concerns about reduced liquidity and market participation if ownership limits are too restrictive. Banking executives warned that overly tight rules could backfire by making the crypto market less stable, not more.

Korea Blockchain Association submitted a formal letter to the FSC on February 11, 2026, outlining potential problems with the ownership caps. The industry group represents most major players in South Korea’s crypto sector and is pushing for a more balanced approach that protects investors without strangling innovation. They want regulators to consider how different digital asset markets work compared to traditional financial markets. For more details, see Trump Media Files for Crypto ETFs.

International exchanges are watching closely. Binance has been talking with South Korean regulators about the proposed changes, though a company spokesperson wouldn’t share details about their strategy. The global exchange giant knows that regulatory shifts in major markets like South Korea can ripple out and affect their operations across Asia.

The FSC scheduled a public hearing for March 2026 where stakeholders can formally comment on the Digital Asset Basic Act. Industry participants are gearing up to make their case for modifications to the ownership caps and other provisions. Market participants expect the hearing to be pretty contentious, with exchanges, investors, and consumer groups all pushing different agendas.

No final decision timeline has been announced yet. The FSC says it needs more time to review feedback and study potential market impacts before moving forward with any ownership limits.

Major institutional investors are already adjusting their portfolios ahead of potential rule changes. Samsung Securities and Mirae Asset Securities have reduced their crypto-related investments by roughly 30% since January, according to industry data. Several pension funds are also reassessing their exposure to digital asset companies, creating additional pressure on exchange valuations.

The ownership caps could force current major shareholders to divest significant stakes. Dunamu, Upbit’s parent company, might need to restructure its investor base if the 15% limit goes through. Similar reshuffling would hit Bithumb’s ownership structure, potentially opening opportunities for smaller institutional players to gain market access.