South Korea’s Financial Services Commission (FSC) is moving to overhaul the governance of the country’s largest cryptocurrency exchanges, proposing new rules that would force controlling shareholders to significantly reduce their stakes.
The changes are part of the upcoming “Phase 2 Virtual Asset Act,” which aims to strengthen market stability, regulate stablecoins, and establish a clearer legal framework for digital assets.
According to reporting by KBS, the FSC told the National Assembly that exchanges with around 11 million users will be designated as “core infrastructure” in the domestic virtual asset market, a classification widely understood to apply to Upbit, Bithumb, Coinone, and Korbit.
The designation places them on par with key financial institutions, reflecting their importance in national market operations.
However, the FSC warned that a small number of founders and major shareholders currently exercise excessive control over exchange operations, with profits such as trading fees heavily concentrated among individual owners.
To address these concerns, regulators are proposing a major shareholder eligibility review system, modeled after standards applied to Alternative Trading Systems (ATS) under the nation’s Capital Markets Act.
Under the proposal, major shareholders would be capped at 15%–20% ownership, a move that could trigger forced sell-downs across the industry. For example, Dunamu Chairman Song Chi-hyung, who owns 25% of Upbit’s parent company, would need to offload as much as 10% of his stake.
Bithumb’s parent company, which holds 73% of the exchange, and Coinone’s chairman, who controls 54%, would face even more substantial reductions.
The timing is particularly significant as Dunamu is currently pursuing a strategic stock-swap merger with Naver Financial, which could be complicated by forced equity restructuring.
Industry leaders argue that the FSC’s plan risks over-regulating a sector that the government claims to support through innovation-friendly policy. Critics warn that the reforms could disrupt management stability, infringe on shareholder property rights, and undermine the competitive strength of Korea’s digital asset sector.
The Phase 2 legislation, which also covers stablecoin oversight and broader market legalization, is expected to be finalized and debated further in 2026.