Key Highlights
- South Korea’s “Phase Two Virtual Asset Law” would include measures to cap the ownership structure of cryptocurrency exchanges.
- The proposal suggests limiting the ownership of major shareholders to between 15% and 20%.
- It aims to provide major crypto exchanges with the same consumer protection regulations as traditional financial institutions.
South Korea’s upcoming “Phase Two Virtual Asset Law” is expected to include measures to cap the ownership structure of the country’s cryptocurrency exchanges. The law focuses on legalizing stablecoins and establishing issuance requirements.
According to a report, the Financial Services Commission (FSC), in a proposal to the National Assembly, said it plans to classify crypto exchanges with over 11 million users as “core infrastructure” within the virtual asset market.
Regulation for major shareholders
In the proposal, the FSC noted that a small group of founders and major shareholders currently control exchange operations. It highlighted growing scrutiny that huge profits from trading fees are accumulated in the hands of a few intermediaries, urging for changes to the ownership structure.
To counter these issues, the regulators reportedly proposed introducing a major shareholder qualification review system similar to that applied to Alternative Trading Systems (ATS) under capital markets law. Additionally, the proposal suggests limiting the ownership of major shareholders to between 15% and 20%.
Impact on crypto exchanges
If the suggested standards are adopted by the National Assembly, the proposed standards could significantly affect major exchanges. At Upbit’s Dunamu, Chairman Song Chi-hyung currently holds 25% of the stake in the company. The proposal, if implemented, could force him to sell up to 10% of his shares.
Coinone may face a similar situation. Chairman Cha Myung-hoon currently holds 54% of the company, indicating he would need to sell more than 34% of his stake.
The regulation could also affect Bithumb. Currently, 73% of the exchange is owned by its holding company. If ownership rules are implemented, the company would have to sell a large chunk of its holdings. The proposal raises serious concerns for exchanges, as it might potentially affect the management control.
Strict exchange rules
The proposal comes as the South Korean government considers increasing the financial liability of crypto exchanges. On December 8, 2025, the FSC announced plans to implement bank-level, no-fault compensation rules for Virtual Asset Service Providers.
The proposed law aims to provide major crypto exchanges with the same consumer protection regulations as traditional financial institutions. The country is pushing for multiple regulations as it sees a need for a stronger legal framework that would protect consumers and improve security standards.
Shift toward oversight
South Korea’s proposed Phase Two Virtual Asset Law indicates a major shift toward stricter oversight of the crypto industry, especially major exchanges. By capping the ownership of the major shareholder, improving government standards, and aligning exchanges with traditional financial institutions, the government aims to reduce control and enhance transparency.
If implemented, the measures could work to reshape ownership and management structures of domestic exchanges while promoting investor protection.
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