South Korean Crypto Exchanges Slam Government's Proposed Ownership Cap

South Korean crypto exchanges have criticized the government’s proposed cap on major shareholder stakes in digital asset exchanges. The Digital Asset Exchange Alliance (DAXA) expressed concerns that such restrictions could stifle the growth of the emerging crypto sector and harm investor protection according to reports. The proposal, introduced by the Financial Services Commission, aims to address governance risks from concentrated ownership as detailed.

DAXA, representing South Korea’s five major exchanges, warned that the cap might lead to a loss of global competitiveness and encourage users to migrate to overseas platforms according to industry analysis. The alliance emphasized the importance of maintaining accountability for user assets, arguing that dispersing ownership could weaken responsibility and reduce trust as DAXA stated.

The proposed ownership cap is among several measures under consideration for inclusion in the upcoming Digital Asset Basic Act. The legislation, expected to be finalized in early 2026, will formalize rules for major crypto initiatives launched in 2025 according to reports.

Why Did This Happen?

The government’s proposal followed two major ownership shakeups in the South Korean crypto sector. For example, Upbit, the country’s largest exchange, merged with Naver Financial in November 2025. Additionally, Mirae Asset Group is reportedly in talks to acquire Korbit as industry sources report. These developments highlight the evolving landscape of ownership in the industry.

The FSC aims to prevent potential governance risks by limiting individual ownership stakes to between 15% and 20% according to the proposal. However, DAXA and other industry stakeholders argue that such restrictions could create uncertainty and deter entrepreneurship and investment as industry experts note.

How Did Markets Respond?

Industry representatives have raised concerns that the cap could lead to capital flight. South Korea’s active retail crypto market, with around six million registered exchange users, faces potential challenges if local platforms lose competitiveness according to market analysis.

The proposed restrictions come amid a broader regulatory shift. South Korea is also planning to launch a spot Bitcoin ETF in 2026 as part of its strategy to enhance the crypto market’s growth and stability according to official announcements.

What Are Analysts Watching Next?

The outcome of the debate over the ownership cap will likely influence South Korea’s position in the global digital asset ecosystem. Market participants are monitoring how regulators balance innovation and consumer protection in the crypto space as analysts observe.

Analysts are also watching for signs of policy compromise between industry stakeholders and regulators. Historical patterns suggest that the government and industry representatives often reach negotiated solutions after initial disputes according to industry analysis.

The regulatory developments reflect South Korea’s broader efforts to modernize its financial sector. With the nine-year ban on corporate crypto investment set to end, the country aims to integrate digital assets into its financial system while maintaining strict oversight as reported.

Investors and industry observers continue to monitor these developments, recognizing their potential impact on the regulatory landscape and market dynamics in the crypto industry.