South Korea Moves to Break Up Crypto Exchange Ownership Concentration

TLDR

• South Korea plans ownership caps to reduce founder control at major crypto exchanges
• The proposal forces divestments and shifts exchanges toward public market style governance
• Upbit, Bithumb, Coinone, Korbit, and Gopax face major ownership restructuring pressure
• Mergers and acquisitions may stall as control limits weaken deal incentives
• The reform could redefine South Korea’s role in global crypto regulation and governance

South Korea has moved toward reshaping the structure of its cryptocurrency market through a proposal targeting concentrated exchange ownership. The plan would cap major shareholder stakes and force divestments at leading platforms across South Korea. As a result, the initiative places governance reform above growth priorities and sets a new regulatory direction for 2026.

The Financial Services Commission of South Korea introduced the proposal under the forthcoming Digital Asset Basic Act framework. The regulator aims to reduce founder dominance and align exchanges with public market style oversight. Consequently, the move signals one of the strongest structural interventions in South Korea’s digital asset sector.

The proposal arrives as South Korea finalizes its second comprehensive crypto law. Authorities intend to formalize exchange licensing, shareholder screening, and ownership dispersion. The policy could permanently alter how South Korea’s exchanges operate and attract capital.

Upbit Faces Founder Stake Reduction

Upbit, operated by Dunamu, would face immediate ownership pressure under the proposal. The largest shareholder currently exceeds the proposed ownership ceiling by a significant margin. Therefore, regulators would require a partial divestment to comply with the new cap.

The proposal treats Upbit as critical financial infrastructure rather than a private startup. As a result, the regulator plans to apply standards similar to alternative trading systems. This shift would place governance obligations above entrepreneurial control.

South Korea views concentrated control at dominant exchanges as a systemic risk. Therefore, policymakers argue that ownership dispersion could improve accountability and market resilience. However, the transition would require careful restructuring over several years.

Bithumb and Coinone Confront Structural Overhaul

Bithumb would face the largest forced divestment under the proposed limits. Its controlling shareholder holds a dominant stake that far exceeds regulatory thresholds. The exchange would need to significantly reduce ownership concentration.

Coinone also faces a substantial adjustment under the plan. Its founder remains the controlling shareholder with a majority position. Regulators would mandate a phased reduction to reach compliance.

South Korea considers these changes necessary to modernize exchange governance. Officials believe reduced concentration can limit conflicts of interest and operational risk. However, the requirement introduces uncertainty around management stability and long-term strategy.

Korbit and Gopax Deals Enter Uncertainty

Korbit’s ownership structure complicates ongoing acquisition discussions. Proposed caps would prevent buyers from securing management control through equity purchases. The strategic value of pending transactions becomes unclear.

Gopax faces similar challenges due to foreign ownership concentration. The proposal restricts large stakes regardless of nationality.  Existing ownership arrangements would require restructuring under South Korea’s rules.

South Korea acknowledges that these changes may disrupt mergers and acquisitions. Still, authorities argue that governance reform outweighs short-term deal friction. The regulator continues discussions on transition timelines.

The proposal also relaxes barriers separating traditional finance and crypto businesses. South Korea may allow securities firms and asset managers to acquire minority exchange stakes. Regulators expect institutional participation to support ownership dispersion.

Industry groups have formally opposed the plan and warned of weakened accountability. They argue that controlling shareholders ensure responsibility for user asset protection. However, regulators maintain that licensing and oversight can replace concentrated ownership.

South Korea plans to finalize the Digital Asset Basic Act within the first quarter. Lawmakers continue consultations on ownership thresholds and transition periods. The outcome will define South Korea’s role in global crypto governance reform.

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