South Korea Proposes Shareholding Limits on Crypto Exchanges

South Korea’s Financial Services Commission proposed a cap on major shareholders’ stakes in crypto exchanges, stirring controversy from the Digital Asset Exchange Alliance (DAXA) on regulatory grounds.

The proposal threatens existing ownership structures, causing potential divestments and legal challenges, impacting market confidence and competitive positioning of South Korean crypto exchanges internationally.

Proposal Sparks Opposition from Major Exchanges

The Korea Digital Asset Exchange Alliance (DAXA), representing the five largest cryptocurrency exchanges, publicly opposed the government’s consideration to limit shareholding ratios in digital asset exchanges. On Tuesday, DAXA expressed concerns that such restrictions could severely hinder the growth of South Korea’s digital asset industry.

If implemented, these restrictions would require prominent shareholders such as Song Chi-hyung of Dunamu and Cha Myung-hun of Coinone to divest a portion of their ownership. This proposal could impact the financial architecture and potential mergers, such as Naver’s agreement with Dunamu valued at 20 trillion KRW.

Key industry figures deemed the proposal as overreach, suggesting it infringes upon management autonomy and shareholder rights. DAXA emphasized that the regulation could affect sovereignty in corporate decisions, shaking the foundations on which these businesses have been built.

Global Context and Market Analysis

Did you know? Indonesia implemented similar ownership restrictions in 2023, capping exchange cross-ownership at 20%.

Ethereum (ETH) currently trades at $3,108.85 with a market cap of $375.22 billion. According to CoinMarketCap, it has declined by 1.37% over the past 24 hours, maintaining a market dominance of 12.07%. Trading volume rose by 32.64%, reflecting a dynamic investment climate.

Analysts at Coincu predict that South Korea’s proposed regulations could compel exchanges to reassess financial strategies. While potentially enhancing regulation consistency, concerns about international competitiveness and asset management autonomy remain pivotal talking points.