<div id="readability-page-1"><div>South Korean regulators and legislators have agreed to cap major shareholder stakes in cryptocurrency exchanges at 20%, despite strong industry pushback.According to a report from the Korea Herald, the ruling Democratic Party's digital asset task force held a meeting with the Financial Services Commission, the top financial regulator, on Tuesday.While the representatives reportedly settled on a 20% ownership cap, they also agreed to allow stakes of up to 34% in exceptions defined by the FSC through enforcement decrees.For major exchanges such as Upbit and Bithumb, the new limit would take effect following a three-year grace period once the legislation is enacted, while smaller exchanges would receive an additional three years to adapt, the report said.If enacted, the proposed ownership limit would force most major South Korean cryptocurrency exchanges to undergo significant restructuring. For instance, Bithumb Holdings currently controls over 73% of Bithumb, while Binance holds more than 67% of Gopax — both far exceeding the anticipated 20% cap on major shareholders and potentially requiring substantial divestments or ownership dilutions.The Block has reached out to the FSC for further information.PushbackIn January, the FSC proposed the ownership limit as a measure to address potential governance risks from concentrated ownership.This sparked strong opposition from the Digital Asset Exchange Alliance (DAXA) — the self-regulatory organization representing South Korea's five major cryptocurrency exchanges, including Upbit and Bithumb.DAXA warned that capping major shareholder equity in exchanges could &#34;significantly impede&#34; the growth of the country's digital asset industry, arguing that attempts to artificially alter the ownership structures of private companies would undermine the foundation of an emerging industry.Some local reports suggested that Bithumb’s accidental $43 billion bitcoin transfer last month fueled regulatory concerns over the industry's internal controls and risk management, potentially influencing the latest decision.Digital Asset Basic ActThe ownership cap is expected to be included in the Digital Asset Basic Act, South Korea's upcoming comprehensive set of regulations for crypto. It is set to cover other major topics such as stablecoin issuance and crypto exchange-traded funds in the nation.Originally targeted for rollout in 2025, the legislation has faced delays that pushed back the timeline. However, the FSC is now expected to finalize its legislative proposal soon, according to a Wednesday report from Hankyung.Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.© 2026 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. </div></div>

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South Korean regulators have agreed to impose a 20% ownership cap on major shareholders of cryptocurrency exchanges, despite industry opposition. The cap will take effect after a three-year grace period for major exchanges and an additional three years for smaller ones. This decision aims to mitigate governance risks but has faced backlash from the Digital Asset Exchange Alliance, which argues it could hinder the growth of the digital asset industry. The ownership cap is expected to be part of the upcoming Digital Asset Basic Act, which will also address other regulatory topics.

- South Korean regulators plan to implement a 20% cap on major shareholder stakes in cryptocurrency exchanges, effective after a three-year grace period.  
- This decision, driven by governance concerns, faces opposition from industry groups like DAXA, warning it may hinder the digital asset sector's growth.  
- The cap will be part of the forthcoming Digital Asset Basic Act, aimed at regulating various aspects of the crypto market in South Korea.

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South Korean authorities settle on 20% ownership cap for crypto exchanges: report