The South Korean Financial Services Commission (FSC) recently proposed limiting the shareholdings of major shareholders in crypto exchange to just 15-20%, creating a new "shock" for the industry on December 30-31, and still casting a long shadow over the industry's future prospects into 2026.
This proposal would force the founders and controlling shareholders of South Korea's five largest crypto exchange to sell off a significant portion of their holdings.
A new year casts a shadow of uncertainty.
The announcement, made just days before the end of the year, quickly prompted the entire industry to XEM the impact of the new regulation. A local media outlet was the first to report on December 30th, and it was subsequently covered by major financial publications. Instead of a celebratory year-end event marking the impressive growth of one of the world's most vibrant crypto markets, everything has now turned into concern about the future ownership structure of exchanges.
"The industry entered 2026 in an atmosphere of regulatory uncertainty," a stock exchange executive told reporters. "Many deals that seemed close to completion are now under complete XEM ."
Major changes in governance
According to the proposal in the Basic Law on Digital Assets, the FSC wants to transform crypto exchange from private businesses controlled by their founders into semi-public infrastructure , similar to the Alternative Trading System (ATS) under South Korea's Capital Market Act.
If this regulation is implemented, the changes will be immediate and widespread:
| Exchange | Largest shareholder | Current shares | Number of shares to be sold |
|---|---|---|---|
| Upbit (Dunamu) | Founder (Song Chi-hyung) | 25.52% | 5-10% |
| Bithumb | Bithumb Holdings | 73.56% | 53-58% |
| Coinone | Founder (Cha Myung-hun) | 53.44% | 33-38% |
| Korbit | NXC | 60.5% | 40-45% |
| GOPAX | Binance | 67.45% | 47-52% |
The proposal also signifies a shift from a registration system to a more rigorous licensing mechanism, with regulatory bodies thoroughly scrutinizing the capabilities and qualifications of major shareholders – a level of scrutiny previously only applied to traditional financial institutions.
Major deals are stalled.
The two biggest deals in South Korea's crypto sector are now facing significant obstacles.
The merger agreement between Naver and Dunamu, aimed at creating a fintech giant valued at approximately 20 trillion won (equivalent to $14 billion), is being directly affected. Under the current structure, Naver Pay would hold 100% of Dunamu – a position that is completely incompatible with the newly proposed ownership limits.
Similarly, the Mirae Asset acquisition of Korbit , for which a memorandum of Mnemonics was recently signed with major shareholders such as NXC and SK Planet, is now facing difficulties. Industry experts point out that investing over 100 billion won without management control will diminish the strategic significance of the deal.
Loosening the barriers between traditional finance and crypto.
Another notable point in this proposal is the loosening of the strict separation between traditional finance and digital asset trading in South Korea.
Since late 2017, when the government imposed strict regulations on crypto amidst a volatile market, authorities have enforced an "unwritten law"—prohibiting banks, insurance companies, and other financial institutions from investing in or collaborating with crypto businesses. This policy aims to protect the traditional financial system from the risks and volatility of digital assets. Although never codified into law, this rule has effectively kept major institutions largely out of the booming crypto market in South Korea.
Currently, the FSC believes that to diversify ownership while ensuring market stability, the participation of established financial institutions is necessary. This could facilitate the participation of securities and asset management companies as shareholders in exchanges, thereby promoting institutional participation and the development of products such as Security Token Offering (STOs) and real asset Tokenize (RWA).
Industry reaction
Exchange executives have strongly objected. They fear that without responsible controlling shareholders, it will be difficult to clearly identify who is accountable whenever an incident occurs. Some argue that implementing rules of conduct and limiting voting rights would be more reasonable than forcing the dispersion of shares.
At the same time, many fear that applying regulations only to domestic businesses could inadvertently create opportunities for foreign competitors, while Korean exchanges have to worry about restructuring.
"The government is trying to enact regulations that go far beyond market-oriented goals," one industry representative commented. "Laws enacted to develop the digital asset industry and protect users could very well violate property rights and disrupt corporate governance."
Global impact
South Korea's proposal also comes amid a growing trend of tightening regulations on crypto exchanges in the region. Indonesia was the first country to open a state-owned crypto exchange in 2023, with regulations limiting cross-ownership between exchanges to no more than 20%. Vietnam also recently issued a pilot licensing mechanism in September 2025, requiring a minimum Capital of $378 million and limiting foreign investors to no more than 49%.
However, what sets South Korea apart is its focus on market leaders rather than simply tightening regulations on newcomers. Forcing the founders of large exchanges to sell off a significant portion of their shares is unprecedented in major crypto markets. With 11 million registered users, South Korea's approach to decentralized ownership will become a closely watched "test case" by regulators in other countries, especially as the world seeks to regulate private platforms as a public service, even if they have become too powerful.
What will happen next?
The South Korean Financial Services Commission (FSC) stressed that this proposal is not a final decision, with officials stating that details such as specific ownership ratios are still under discussion. Some legal experts predict that there may be a transition period of 5 to 10 years to allow parties to gradually comply with the new regulations.
Currently, the South Korean cryptocurrency industry is entering 2026 with the prospect of undergoing the biggest changes since the first exchanges appeared 13 years ago. The coming months will determine whether this shift will solidify the market's foundations or disrupt the momentum that has helped South Korea become one of the world's leading crypto hubs.
