South Korea’s Crypto Exchange Ownership Cap Not Politically Driven, FSC Says as Digital Asset Law Nears Final Stage
TREE NEWS reports: South Korea’s Financial Services Commission (FSC) has pushed back against allegations that a proposed cap on major shareholders’ stakes in crypto exchanges was inserted at the behest of outside interests. FSC Chairman Lee Eok-won told lawmakers during a National Assembly audit that the measure was “not directed by anyone,” framing it as a structural requirement tied to the industry’s shift from a registration-based regime to a licensing-based one.
The proposed ownership limit is designed to reinforce the public-interest character of exchanges as critical financial infrastructure, Lee said. Opposition lawmakers had questioned whether the clause was quietly added under the influence of a specific venture capital firm, Hashed, and former officials.
Why the Ownership Question Matters
Ownership concentration at exchanges is one of the most consequential — and least settled — questions in crypto regulation globally. In South Korea, a handful of exchanges dominate trading, and several are closely tied to founding shareholders, affiliated token issuers, and venture backers. A formal cap would force structural separation between exchange operators and the capital that controls them, echoing governance principles seen in traditional finance, where banks and brokerages face ownership thresholds to prevent conflicts of interest.
Critics argue that a strict cap could chill investment in compliant platforms and push activity offshore. Supporters counter that the collapse of several high-profile exchanges worldwide showed that concentrated control over customer assets is a systemic risk, not merely a corporate governance issue.
The Digital Asset Basic Act Enters Its Final Stretch
Lee also revealed that inter-agency consultations on the Digital Asset Basic Act are in their final phase, with the FSC accelerating the legislative process. The law is expected to establish a comprehensive framework covering token issuance, disclosure, market conduct, and exchange obligations — a significant step beyond the country’s current patchwork of rules.
On the contentious topic of won-denominated stablecoins, Lee said the government would advance policy in line with market conditions while aligning with international standards. He also addressed the licensing and operation of virtual asset service providers (VASPs), signaling a phased approach that balances innovation with investor protection.
What to Watch
- Ownership cap specifics: The exact percentage threshold and whether it applies to existing shareholders or only new entrants will determine how disruptive the rule is.
- Stablecoin framework: Whether won stablecoins are treated as bank-adjacent instruments or a separate category will shape competition among issuers.
- Licensing transition: Moving from registration to licensing raises capital, compliance, and governance bars — likely accelerating consolidation among smaller exchanges.
- Political sensitivity: The allegations of external influence ensure the bill’s passage will remain under intense scrutiny.
If enacted, the Digital Asset Basic Act would position South Korea among the most structured crypto jurisdictions in Asia, alongside Japan and Singapore. The ownership cap, however, remains the most politically charged element. Its final design will signal whether Seoul prioritizes market stability and public accountability over the growth ambitions of its domestic crypto industry.
