South Korea Caps Crypto Exchange Ownership at 20% for Major Shareholders

South Korea limits crypto exchange major shareholders to 20%, with exceptions up to 34%, and grace periods for compliance by key exchanges.

South Korea has agreed to limit major shareholder stakes in crypto exchanges to 20%. This decision applies to all exchanges and aims to improve governance. The Financial Services Commission (FSC) and the Democratic Party’s Digital Asset Task Force finalized the plan even as the industry expressed concerns about it. Exceptions of up to 34% will be allowed for new business owners.

Regulators and Lawmakers Agree on Ownership Cap

The FSC and Democratic-party talked about the rules of major shareholder limitations. The 20 percent cap is a standard that applies to all exchanges. Grace periods are provided to enable exchanges to adjust their ownership. The law gives exchanges three years to comply after it is enforced. Smaller exchanges may receive an additional three-year extension.

The 34% exception will be limited to new business owners. The number is in accordance with the commercial law standards, where 33.3% can veto shareholder meetings. Existing major shareholders will not benefit from the increased limit. This approach is a trade-off between regulatory oversight and operational flexibility for new entrants in the market.

Major Exchanges Face Ownership Adjustments Within Grace Periods

Leading exchanges such as Upbit and Bithumb have to sell majority stakes in 3 years. Upbit’s major shareholder currently holds 25.52% of the shares. Bithumb Holdings owns 73.56% of Bithumb. Meanwhile, smaller exchanges such as Coinone, Corbit, and Gopax are given up to six years to comply with the 20% cap. These steps are an attempt to take it out of concentrated control and make things more transparent.

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The rule also addresses concerns over the ability of minority founders to exert too much influence over exchanges. The FSC stressed that exchanges were critical financial infrastructure. Therefore, there is a need for proper governance and accountability for market stability. The Digital Asset TF assisted in negotiating compromises with the Finance Committee. These included grace periods and obvious exceptions for new owners.

Gopax and Other Exchanges to Follow 20% Cap Under New Law

Industry participants have expressed concerns over competition and innovation. Many exchanges currently surpass the 20% threshold. For example, Coinone has 53.44, and Gopax has 67.45 major shareholder holdings. An insider said that strict limits could reduce market flexibility; however, lawmakers aim to balance regulation with growth. However, lawmakers are looking to balance the goal of user protection with opportunities for the growth of the digital asset sector.

The new regulation is expected to pass in spite of the fact that there are some members of the party who are opposed to it. Closed-door meetings with the Finance Committee clinched the ownership cap. Once enforced, the law will force all exchanges to abide by the 20% limit or use approved exceptions. This step enhances governance, transparency, and investor protection in the crypto market in South Korea.

Overall, South Korea’s new shareholder rules are aimed at creating a fairer and safer market environment. Exchanges now have hard and fast deadlines and incentives to make changes to ownership. The policy is setting an example of dealing with major shareholder influence and yet keeping the industry growing.

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