South Korea Moves to Break Up Crypto Exchange Ownership – And the Industry Is Pushing Back

Key Takeaways

• South Korea plans to cap crypto exchange ownership at 15–20%, with limited exceptions up to 34%
• Major players like Bithumb (73% owned) and Coinone (53%) face massive forced divestments
• Upbit and Bithumb together control ~96% of domestic trading volume, serving 11 million users
• Industry groups call the move unconstitutional; regulators say it’s necessary to prevent manipulation

The Financial Services Commission (FSC), working alongside the ruling party’s digital asset task force, is finalizing a proposal to cap individual and corporate ownership of major crypto exchanges at between 15% and 20% of total equity.

The measure is set to be embedded in the Digital Asset Basic Act (Phase 2), which is expected to go before parliament for review and finalization in early 2026.

The FSC has left one significant carve-out: ownership up to 34% may be permitted under vaguely defined “special circumstances,” a provision that critics say is broad enough to render the cap inconsistent in practice.

Forced Divestments at Scale

If passed as written, the law would compel some of the country’s most prominent crypto figures to shed substantial portions of their holdings.

Upbit’s parent company Dunamu, chaired by Song Chi-hyung, currently holds an estimated 25–28% stake – meaning Song would need to offload somewhere between 5% and 10%.

The situation is considerably more drastic at Bithumb, where Bithumb Holdings controls roughly 73% of the exchange. That would require a divestment of more than 50 percentage points. Coinone Chairman Cha Myung-hoon, sitting at approximately 53–54%, faces a similar reckoning.

Compliance timelines vary by size. Major exchanges like Upbit and Bithumb would have three years from the law’s enactment to comply. Smaller platforms – Coinone, Korbit, and GOPAX – could receive up to six years, including a possible three-year extension.

Why Regulators Are Acting Now

The numbers behind South Korea’s crypto market make the regulatory logic easier to follow. Upbit and Bithumb together account for roughly 96% of domestic trading volume. More than 11 million South Koreans – a significant slice of the adult population – use these platforms, a fact that has led regulators to formally reclassify them as “core financial infrastructure.”

The volume figures are not trivial. In 2025, Upbit recorded quarterly trading volume of approximately KRW 411 trillion (around $286 billion). Bithumb logged KRW 128 trillion over the same period.

The FSC’s position is that this degree of concentration, combined with dominant individual ownership, creates conditions ripe for market manipulation, insider trading, and conflicts of interest in token listing decisions.

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Industry Opposition Is Unified – and Pointed

The response from the industry has been swift and unambiguous. DAXA, the industry body representing South Korea’s five major exchanges, has come out in collective opposition, arguing that forcing shareholders to divest violates constitutional property rights. The organization has not indicated any willingness to negotiate the core ownership threshold.

Objections extend beyond the exchanges themselves. The Korea Startup Forum has warned that mandatory divestment sends a hostile signal to founders across the sector, and that some firms may choose to relocate operations abroad rather than restructure under the new rules.

On the political side, opposition lawmakers and advisers within the Democratic Party have raised questions about whether hard ownership caps are the right instrument at all – suggesting that measures like mandatory IPOs or enhanced disclosure requirements might achieve the same transparency goals with less disruption to property rights.

A Shifting Regulatory Landscape

The ownership cap proposal doesn’t exist in isolation. In February 2026, South Korea reversed a nine-year prohibition on corporate crypto investment, clearing listed companies to allocate up to 5% of equity to digital assets – a signal that Seoul is not moving toward blanket restriction, but toward structured oversight.

Meanwhile, institutional appetite for the sector continues to grow. Mirae Asset Financial Group is reportedly in active talks to acquire Korbit for approximately $97.5 million. Whether any such deal can close cleanly will depend in part on how the final ownership rules are written – and how broadly the “special circumstances” exemption ends up being applied.

Parliamentary review is expected to begin in early 2026. How far the bill survives contact with opposition lawmakers remains an open question.

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