South Korea’s Financial Services Commission (FSC) has sparked significant industry pushback after proposing a cap on the stakes held by major shareholders in cryptocurrency exchanges. The move has drawn sharp criticism from the Digital Asset Exchange Alliance (DAXA), which represents the nation’s five largest trading platforms.
A Threat to Ownership and Innovation
The proposed regulations would force high-profile founders—such as Song Chi-hyung (Dunamu/Upbit) and Cha Myung-hun (Coinone)—to divest significant portions of their companies. Industry leaders argue that this “forced disposal” of shares undermines the principles of a capitalist economy and penalizes entrepreneurs who built these platforms from the ground up.
Key concerns raised by DAXA and industry officials include:
- Management Autonomy: The proposal is viewed as a government overreach that infringes upon shareholder rights and corporate sovereignty.
- Market Stability: Such a drastic change to the financial architecture could derail major deals, including the highly-publicized 20 trillion KRW agreement between Naver and Dunamu.
- Competitive Disadvantage: Critics warn that these restrictions will stifle the growth of South Korea’s digital asset sector, making local exchanges less competitive on the global stage.
Shaking the Foundation
Industry insiders are questioning the fairness of retroactively applying ownership rules that did not exist when these exchanges were established. By forcing divestment, the government risks damaging market confidence and disrupting the internal stability of the country’s most successful fintech firms.
As the debate intensifies, the outcome will likely determine whether South Korea remains a top-tier global crypto hub or if regulatory friction drives innovation and capital elsewhere.
