South Korea Startups Oppose Crypto Exchange Ownership Cap

Seoul, South Korea - The nation's startup industry is pushing back against proposed regulations that would cap major shareholders' stakes in cryptocurrency exchanges at 15-20%, warning that such restrictions could undermine property rights and chill investment across the country's technology sector.

The Korea Startup Forum said Thursday that financial authorities are considering the ownership limits as part of the second-phase digital asset legislation.

The forum expressed support for strengthening public accountability and user protection but characterized retroactive requirements forcing private companies to restructure ownership as excessive regulation that could produce unintended consequences.

Instead of ownership caps, the group argued that accountability should be enforced through operational safeguards, including secure management of user assets, conflict-of-interest protections, and internal control systems designed for rapid incident response.

Mandatory divestment requirements for existing major shareholders could violate property rights and create broader uncertainty throughout South Korea's innovation economy, potentially dampening investment sentiment and raising capital costs beyond the cryptocurrency industry, the forum said.

The organization pointed to major financial centers including the United States, Britain and Singapore, noting that these jurisdictions supervise cryptocurrency exchanges through monitoring systems for control acquisition while focusing on management qualifications and transparency rather than direct ownership restrictions.

The forum called on the government and parliament to conduct stakeholder consultations and regulatory impact assessments, describing digital asset markets as public infrastructure.

It pledged to work with authorities toward building markets based on user trust while maintaining global competitiveness.