The 15% Equity Threshold: A Governance Revolution and Capital Reshuffling at Korean Stock Exchanges

Original author: KarenZ, Foresight News

As 2025 draws to a close, the Financial Services Commission (FSC) of South Korea has put forward a proposal in the "Second Phase Legislation on Virtual Assets," which aims to promote the institutionalization of the market: requiring major shareholders of the country's major cryptocurrency exchanges to significantly reduce their shareholdings.

According to a parliamentary report obtained by KBS, the Financial Services Commission of South Korea has fundamentally changed its positioning of cryptocurrency exchanges. Exchanges with over 11 million active users in South Korea will be defined as "core infrastructure" for virtual assets. This is interpreted by the market as referring to four exchanges: Upbit, Bithumb, Coinone, and Korbit.

This shift in positioning may provide a legal basis for stricter regulatory intervention.

Regulation targets the core issues: two major problems in governance structure

Regulatory authorities have pointed out that the current governance structure of exchanges is seriously flawed:

• 1. Over-concentration of power: A small number of founders or major shareholders have absolute say in the platform's operation, lacking an effective check and balance mechanism. This management model may lead to conflicts of interest and moral hazards when facing major decisions.
• 2. Privatization of Profits: The enormous transaction fees generated by exchanges as infrastructure have disproportionately flowed into the pockets of certain individuals. The fairness of this distribution has sparked widespread criticism.

The majority shareholder's stake is limited to between 15% and 20%.

To address this issue, the Financial Services Commission proposed introducing a shareholder eligibility review system similar to the "Alternative Trading System (ATS)" in the securities market, suggesting that the shareholding ratio of major shareholders in exchanges be limited to between 15% and 20%.

According to KBS, under the current Capital Markets Act, major shareholders and related parties of ATS are not allowed to hold more than 15% of the voting shares, with exceptions allowed only for mutual funds or with special approval from the Financial Services Commission, in which case they may hold up to 30%.

The establishment of this standard reflects the regulatory authorities' intention to bring the governance structure of cryptocurrency exchanges closer to that of traditional financial institutions, moving from unregulated growth to standardized governance.

The four major exchanges are under pressure

If the plan is approved and implemented, the governance structure of South Korea's four major stock exchanges will face unprecedented restructuring challenges:

1. Upbit (operator Dunamu): The chairman of Dunamu holds 25.5% of the shares.

As the undisputed leader in South Korea's virtual exchange market, Upbit is the first to be affected. In my previous article, " Naver 'Swallows' Upbit: A 'Premeditated' Attempt to Gain Dominance in the Korean Won Stablecoin Market, " I cited a report from the Dong-A Ilbo stating that Dunamu's major shareholders include its chairman and board member, Song Chi-hyung, who holds approximately 25.5% of the shares. If the proposal is approved, he will be forced to sell approximately 5% to 10% of his shares.

Even more serious is Dunamu's ongoing stock swap and merger with Naver Financial (the financial subsidiary of South Korean internet giant Naver). The new regulations will not only weaken the founders' control but may also trigger deep concerns among regulators about market concentration. Regulators appear intent on preventing the emergence of monopolistic platforms.

2. Bithumb: Bithumb Holdings holds a 73% stake in the exchange.

Bithumb's shareholding structure is more concentrated. According to KBS, its holding company, Bithumb Holdings, holds 73% of the exchange's shares. To meet the 20% shareholding threshold, Bithumb Holdings would have to sell or transfer more than 50% of its shares. This is not just a simple reduction in holdings, but could mean a fundamental reshaping of the entire group's holding structure.

3. Coinone: The chairman holds 54% of the shares.

For Coinone, Chairman Myung-hoon Cha currently holds 54% of the shares, a typical "one-person absolute control" model. If he disposes of more than 34% of the shares, it means he will lose absolute control of the company.

For a mid-sized exchange like Coinone, once control of operations is lost, the company's ability to maintain strategic continuity becomes uncertain. This is not merely a change in shareholding.

4. Korbit: NXC and its subsidiaries collectively hold approximately 60.5% of the equity.

According to a previous report by the Chosun Ilbo, Korbit is currently owned by NXC and its subsidiary Simple Capital Futures, which together hold approximately 60.5% of the shares, while SK Square holds approximately 31.5%. At the end of December, Mirae Asset was reportedly in talks to acquire a 92% stake in Korbit, with the deal valued at up to 140 billion won (approximately US$97 million). Mirae Asset is also a shareholder of Naver Financial.

If Mirae Asset completes the acquisition, it will also face shareholding restrictions once the proposal is approved; if the acquisition is shelved due to the new regulations, how should Korbit's existing shareholders deal with the mandatory reduction of their holdings?

The Logic and Hidden Concerns Behind Regulation

Behind this proposal is the regulator's clear intention to promote a "highly institutionalized" crypto market—to transform the extensively developing crypto exchange industry with the mature systems, risk control capabilities, and compliance culture of traditional finance, thereby reducing systemic risks.

Some analysts believe that forcing major shareholders to reduce their holdings is essentially paving the way for traditional financial institutions such as banks and securities firms to enter the market, with well-capitalized financial giants potentially becoming the acquirers of the shares. This could accelerate the "high institutionalization" of the South Korean cryptocurrency market.

However, the controversy is equally prominent. From an innovation perspective, will this stifle the original vitality of the crypto industry? According to a view cited by KBS, forcibly applying the equity dispersion rules of traditional securities exchanges to the virtual asset exchange industry is "forcing a square peg into a round hole." Forcing founders to sell their assets seriously infringes on private property rights and may lead to management instability, which is ultimately detrimental to the protection of investors.

Although the "second phase of legislation on virtual assets" includes many positive news such as the legalization of stablecoins and the standardization of market access, the "sword of Damocles" hanging over the heads of exchanges still makes the market very worried.

There are widespread concerns that if the proposal passes, exchanges could descend into governance chaos, strategic indecision, and even power struggles, plunging the industry into a prolonged period of adjustment. During this time, crypto-friendly jurisdictions such as Singapore and Dubai may seize the opportunity to attract South Korean crypto companies and capital outflows, weakening the competitiveness of the domestic blockchain industry.

summary

Regardless of the outcome, this game is stirring up the discourse and power structure of the South Korean cryptocurrency market.

Exchanges can no longer consider themselves purely market players, and regulators must find a delicate balance between financial stability and industrial development.