Korea's Crypto Exchange Oversight Faces Policy Debate Over Ownership Restrictions

Policymakers in Korea are divided over how best to regulate ownership structures in the crypto exchange sector. The Democratic Party’s Digital Asset Task Force has recently taken issue with the Financial Services Commission’s proposal to impose a 15-20% cap on major shareholder stakes in digital asset platforms. Rather than supporting blanket ownership restrictions, Democratic advisers are championing an alternative regulatory approach that could reshape Korea’s approach to exchange governance.

Democratic Party Challenges FSC’s Ownership Cap Initiative

According to reporting from NS3.AI, the Democratic Party’s advisory committee has pushed back against what they view as an overly restrictive ownership model. The group argues that limiting individual shareholders to 15-20% stakes may not be the most effective way to address the underlying concerns driving the FSC’s proposal. Instead of adopting such caps, the advisers believe Korea should prioritize establishing robust institutional safeguards to prevent problematic behavior and protect market integrity.

Building Stronger Legal Frameworks Instead of Ownership Limits

The Democratic Party’s position centers on a more nuanced regulatory philosophy. Rather than simply capping ownership percentages, they advocate for comprehensive legal structures combined with rigorous accountability mechanisms. This framework would include enhanced monitoring systems, transparent governance requirements, and checks specifically designed to prevent conflicts of interest and curb illegal activities within exchange operations. The advisers contend that such layered protections could be more effective than blunt ownership restrictions alone.

Why This Debate Matters for Korea’s Exchange Ecosystem

The disagreement between the Democratic Party and the FSC reflects a broader tension in Korea between preventative regulation and structural constraints. The FSC’s ownership cap approach assumes that limiting any single investor’s control naturally reduces systemic risk. The Democratic advisers counter that well-designed oversight mechanisms can achieve the same protective effect with less disruption to capital flows and investment flexibility. How Korea resolves this policy debate will likely influence the competitiveness and innovation capacity of its digital asset sector.