South Korea's Crypto Ownership Caps Threaten Major Exchange Deals
Regulatory Shake-Up in South Korea
South Korea's Financial Services Commission (FSC) has unveiled a proposal to cap ownership stakes in cryptocurrency exchanges at 15-20%, posing a significant challenge to the industry's future.
This move would compel founders of the top five Korean exchanges to reduce their holdings.
Uncertainty Looms Over 2026
The announcement, made just before the new year, has left industry stakeholders in a state of flux, as they assess its implications for 2026. Local media reported the news on December 30, turning what was expected to be a celebratory time into a period of uncertainty.
“Entering 2026, the industry faces regulatory uncertainty,” an exchange executive noted. “Key deals are now reconsidered.”
Governance Overhaul
Under the proposed Digital Asset Basic Act, the FSC seeks to transition exchanges from founder-led private entities to quasi-public infrastructure, akin to Alternative Trading Systems under Korea's Capital Markets Act. The proposal includes:
- Immediate and extensive impact
- Shift to a licensing regime with major shareholder fitness reviews
Deals in Jeopardy
Major deals like Naver's merger with Dunamu and Mirae Asset's acquisition of Korbit face obstacles due to the new ownership caps, threatening their strategic viability.
Opening Finance to Crypto
The proposal could ease restrictions on financial institutions investing in crypto, potentially enhancing institutional adoption and market stability.
Industry Reaction
Exchange operators have criticized the proposal, arguing it could obscure shareholder accountability and inadvertently benefit foreign competitors.
“The regulation oversteps market norms,” an industry representative stated. “It risks infringing on property rights and destabilizing governance.”
Global Impact
Korea's proposal is part of a regional trend towards formalizing crypto exchange governance, with Indonesia and Vietnam setting similar precedents.
Future Prospects
The FSC emphasizes that the proposal is not final. Discussions on ownership thresholds and potential transition periods continue, as the Korean crypto sector braces for a transformative 2026.