Financial regulators in South Korea are reviewing a proposal to limit major shareholder stakes in cryptocurrency exchanges, a move that industry representatives suggest could destabilize the sector.
South Korea Reviews Ownership Caps for Digital Asset Exchanges
14 January 2026 - 18:14 CET
By Sandmark staff
According to a report by The Chosun Daily, the proposed measure would cap individual ownership at between 15% and 20%. This would align the digital asset industry with established limits found in the traditional banking and alternative stock exchange sectors.
The Digital Asset Exchange Alliance (DAXA), which represents major domestic platforms including Upbit and Bithumb, issued a statement on 13 Jan expressing concern regarding the plan. The group argued that mandatory stake dilution would discourage long-term investment and weaken the competitive position of South Korean exchanges against global rivals.
Regulatory parity versus market dynamics
The proposal is being considered as part of the second phase of South Korea’s virtual asset legislation, which focuses on governance and systemic risk. While regulators aim to achieve parity with other financial institutions, industry participants suggest that the digital asset sector operates under different market dynamics. DAXA noted that if domestic investment is curtailed, users may migrate to international exchanges with fewer structural constraints.
Beyond the prospect of capital flight, industry advocates suggest that dispersing ownership could erode the chain of responsibility for user protection. DAXA noted that without a clear controlling shareholder, liability for failures in custody or risk management could become fragmented. This fragmentation could potentially complicate the safety standards the regulators intend to uphold.
Friction in the domestic digital asset ecosystem
The tension highlights a persistent struggle within South Korea’s digital asset policy. While the country maintains stringent requirements for real-name trading and bank supervision, the push for further governance restrictions is perceived by some as an administrative hurdle that could slow technological development.
The outcome of this legislative phase will determine the future of South Korea as a hub for regulated digital asset commerce. As institutional budgets continue to replace retail speculation globally, the ability for domestic exchanges to retain strategic capital is becoming a significant factor in their long-term viability.
