The battle for ownership between Korean crypto exchanges and the government: Will the 15% shareholding cap stifle the industry?

The Korea Financial Services Commission (FSC) and industry associations have fundamental disagreements over exchange ownership issues. The FSC plans to limit major shareholders’ holdings in crypto exchanges to between 15% and 20%, attempting to prevent governance risks through dispersed ownership. However, this move has been strongly opposed by the Korea Digital Asset Exchange Association (DAXA). The outcome of this policy debate will directly influence the future direction of Korea’s crypto industry.

Policy Proposals and Industry Positions

The FSC’s logic is relatively straightforward: ownership concentration leads to governance risks. Such concerns are not unprecedented in the financial industry; concentrated control could be used to make decisions detrimental to other shareholders or users. By limiting major shareholders’ holdings, the FSC aims to establish a more dispersed ownership structure to enhance corporate governance robustness.

DAXA’s Main Reasons for Opposition

DAXA explains from multiple dimensions why this restriction would be “harmful” rather than “protective”:

• International Competitiveness: Digital assets circulate globally without restrictions. If domestic exchanges cannot secure ongoing investment, their competitiveness will decline.
• Capital Flow Risks: Shareholding limits may hinder major shareholders’ further investments, prompting capital to flow to overseas platforms, which is a significant loss for Korea’s domestic industry.
• User Protection Paradox: DAXA points out that dispersed ownership could weaken major shareholders’ ultimate responsibility for user asset custody and management, contradicting the original intent to protect users.
• Industrial Foundation Damage: Artificially changing the ownership structure of private companies is seen by DAXA as directly harming the foundation of emerging industries.

Clash of Two Logics

This controversy essentially reflects different risk perceptions. The FSC focuses on “risks of concentrated power,” while DAXA emphasizes “industry development risks.” To some extent, both sides have valid points. Historically, there have been cases of major shareholders abusing their power, but excessive dispersal of ownership could also lead to decision-making inefficiencies and blurred responsibilities.

The Broader Context of Korea’s Crypto Policy

This shareholding restriction is part of the deliberation measures for the “Basic Law on Digital Assets,” with related legislation expected to be completed in the first quarter of 2026. This means there are less than three months until a final decision. During this window, industry voices like DAXA still have opportunities to influence the final policy direction.

Possible Impact Paths

If the ownership cap is ultimately codified into law, Korea’s exchange financing and development models will face fundamental adjustments. This could lead to:

• Major shareholders being forced to divest or seek overseas investment channels
• Increased difficulty in exchange financing, potentially affecting technological upgrades and risk control investments
• Domestic high-quality exchanges being eroded by international platforms

Conversely, if DAXA’s opposition is accepted, Korea will maintain a relatively relaxed ownership policy, but governance risks highlighted by the FSC will still need to be addressed through other means.

Summary

The core of this dispute is not “whether to regulate” but “how to regulate.” The FSC aims to prevent risks through ownership dispersion, while DAXA believes this would harm industry competitiveness. Both sides have valid arguments; the key lies in how the Korean government balances “risk prevention” and “industry development.” The legislative outcome in the first quarter will determine Korea’s crypto industry’s future approach to ownership governance. This also offers a reference for other regulators—how to protect investors and users without overly stifling the vitality of emerging industries.