South Korea’s Financial Services Commission (FSC) proposed sweeping changes under the upcoming Phase Two Virtual Asset Law (also referred to as the Digital Asset Framework Act), classifying major crypto exchanges serving over 11 million users — including Upbit, Bithumb, Coinone, and Korbit — as “core infrastructure” for virtual asset distribution.
The key measure: cap individual or major shareholder voting share ownership at 15-20% (with exceptions up to 30% only via explicit FSC or public fund approval). This aims to prevent excessive control by founders and shareholders, who officials say concentrate huge operating profits (like fees) among a small group, potentially harming fair market operations and consumer interests. The FSC plans to introduce an Alternative Trading System (ATS)-style major shareholder eligibility review to enforce dispersed ownership.
The impact could be significant: Upbit operator Dunamu’s Chairman Song Chi-hyung (holding ~25%) may need to divest up to 10%; Bithumb Holdings (73% ownership) could face selling over half its stake; Coinone’s Chairman Cha Myung-hoon (~54%) would likely sell more than 34%. These forced sales raise concerns about management stability, potential share price drops, buyer shortages, and whether foreign investors can participate. The proposal ties into broader efforts to align crypto platforms with traditional financial protections, including no-fault compensation rules announced December 8, 2025.
Critics from the industry argue it’s excessive regulation beyond market norms, potentially infringing property rights, destabilizing governance, and hindering innovation — especially amid ongoing delays in the full Digital Asset Basic Act due to debates over stablecoin issuance (Bank of Korea pushing for bank-majority consortia at 51%+).
The news broke December 30, 2025, exploding on X with reports, charts, and reactions circulating widely, fueling debates on regulatory balance, founder control, consumer protection, and South Korea’s crypto market future among traders, operators, and policymakers.
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What’s your take — will these ownership caps strengthen consumer protection in South Korea’s crypto market, or risk stifling innovation and driving operations abroad? Drop your thoughts below 👇