The South Korean authorities have approved a plan to reduce the stakes of major shareholders in cryptocurrency exchanges to 20%. Local media reports this news.

New market entrants may be granted exceptions, allowing them to hold up to 34%. This threshold aligns with the Commercial Code, which states that 33.3% of votes are needed to block decisions at a shareholders' meeting.

If the law is enacted, exchanges will have three years to adjust their ownership structures to meet the new requirements. This affects Upbit and Bithumb, which together control about 90% of the South Korean market. Smaller platforms will receive an additional three-year grace period.

Current Situation

The current shareholding structure of the largest local trading platforms exceeds the proposed limit:

  • Upbit's chairman, Song Chi-hyun, owns approximately 25.52%;
  • Bithumb Holdings controls about 73.56% of Bithumb;
  • Mirae Asset Consulting will hold around 92.06% of Korbit after a deal;
  • Binance owns about 67.45% of GOPAX.

These are the largest exchanges in South Korea. Source: CoinGecko.

Future Outlook

Despite gaining support from regulators, the bill faces a long path to approval. It still needs to be introduced in the National Assembly by a member (the specific member is currently unclear).

Once introduced, the bill may encounter resistance: some parliamentarians, including those from the ruling party, have already expressed doubts about the necessity of such strict limits.

Local media have warned that the new measures could harm competition:

“This is an unprecedented practice globally that contradicts international approaches. If regulation is too stringent, it will have serious consequences—limiting competition, slowing innovation, and creating high barriers to market entry.”

Tightening Regulations

Earlier this year, the National Assembly tightened licensing requirements for Virtual Asset Service Providers (VASP). Regulators gained the authority to investigate executives and major shareholders for a broader range of violations—from drug trafficking and tax evasion to antitrust and serious economic crimes.

In February, lawmaker Kim Seung-won announced the next step. Amendments to the capital market and virtual asset user protection laws will require disclosure of information about those providing investment advice or promoting trading in financial products and cryptocurrencies.

It is worth noting that in January, South Korea lifted the ban on corporate investments in cryptocurrencies.