South Korea is preparing to impose sweeping changes on its leading crypto asset exchanges. According to a report by the Financial Services Commission (FSC) to the National Assembly, exchanges with roughly 11 million users will be designated as “core infrastructure” for digital asset distribution. This label is widely interpreted to refer to Upbit, Bithumb, Coinone, and Korbit.
The FSC’s proposal comes as part of the “Phase 2 Virtual Asset Act,” which mainly focuses on regulating stablecoin issuance and formalizing market operations. In addition to compliance measures, the legislation seeks to restructure governance in major crypto exchanges, addressing concerns about concentrated ownership and excessive founder control.
Ownership Limits and Major Shareholder Review
The FSC highlighted issues in which a small group of founders and shareholders currently hold dominant control over exchange operations, profiting heavily from transaction fees and other revenue streams. To address this, the commission proposed introducing an Alternative Trading System (ATS)-style “major shareholder eligibility review” and limiting ownership to 15–20%.
According to existing legislation under the Capital Markets Act, alternative stock exchanges cannot own more than 15% of the voting stocks in a company, except in cases where a higher level of up to 30% is permitted. If the FSC’s proposed legislation is passed, large owners may be required to reduce their ownership.
Impact on Crypto Gaints Dunamu, Bithumb, and Coinone
The impact could be significant. Dunamu, operating Upbit, will get affected the most. Its chairman, Song Chi-hyung, currently holds a stake of 25% in the company. However, if the revised limit is considered, he will have to sell a stake of as much as 10% of his holding in the company.
Currently, Dunamu is attempting to merge with Naver Financial in an all-stock swap deal. Bithumb Holdings, which has a total of 73% shares in Bithumb, may be required to sell a significant portion of the shares that it owns. There is therefore a concern over the stability of the governance structure that the exchange follows.
Coinone’s situation is even more difficult since Chairman Cha Myung-hoon owns a total of 54% of the shares. Even then, he will be required to reduce the stake by at least 34% in case the new restrictions are implemented.
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