Major Shareholder Stake Cap Set... Five Major Coin Exchanges on Alert

The government and the ruling party have decided to set a 20% upper limit on the shareholding ratio for major shareholders of virtual asset exchanges. However, concerns have been raised about the possibility of it being unconstitutional, as it could infringe on property rights. There are also worries that investments in coin exchanges may decrease.

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According to The Asia Business Daily’s coverage as of March 5, the Digital Asset Task Force (TF) of the Democratic Party of Korea discussed a compromise draft for the Digital Asset Basic Act during a closed-door meeting with the party's policy chief on March 3. The TF reportedly agreed to set the upper limit for major shareholder stakes at 20%, while allowing up to 34% in certain exceptions determined by the Financial Services Commission through an enforcement decree. The grace period for implementing the shareholding limit is set at three years after the law comes into effect. In addition, exchanges that do not meet certain market share criteria will be granted an additional three-year grace period.

Accordingly, Upbit and Bithumb, which together account for a combined 90% of the market share, will need to adjust their major shareholders’ stakes within three years of the law’s enactment. For exchanges with lower market shares such as Coinone, Korbit, and Gopax, it is estimated that they will have up to six years of grace period. However, since the final consultation has not yet taken place, these specific figures may change. The final government-party consultation scheduled for today has been temporarily postponed due to the U.S. and Israel’s airstrikes on Iran.

If this proposal is finalized, all five major virtual asset exchanges will need to adjust their shareholdings. Dunamu, the operator of Upbit, currently has Chairman Song Chi-hyung holding a 25.52% stake. If a comprehensive stock swap with Naver Financial takes place, Chairman Song will own 19.5%, and Naver will hold 17%. However, if regulations such as the inclusion of related parties are added, the 13.11% stake held by Kim Hyungnyun, the co-founder and vice chairman, will also be considered, potentially exceeding the upper limit. At Bithumb, Bithumb Holdings owns 73.56%; at Coinone, CEO Cha Myunghoon holds 19.14% while The One Group, in which he owns more than 8%, holds 34.35%. Korbit, upon completion of acquisition by Mirae Asset Consulting, will have a single largest shareholder structure. For Gopax, Binance holds a 67.45% stake in the operating company Streami.

In particular, for Upbit, Korbit, and Gopax, which are facing imminent share transactions, the terms of their agreed-upon deals may need to be renegotiated from scratch, making calculations more complex. In the case of Gopax, there are even concerns that Binance, its largest shareholder, might delay resolving the "GoFi incident"-where user deposits could not be paid out-and instead make an exit. If the unpaid debt remains and the shareholding ratio must be reduced, capital injections such as debt repayment could be postponed, and there is the possibility that Binance could divest all shares and exit the market entirely.

Within the virtual asset industry, some argue that setting an upper limit on major shareholders' stakes effectively strips them of management rights under the guise of creating "public infrastructure." An industry insider stated, "Major shareholders of virtual asset exchanges have continuously invested capital with the expectation of market expansion and openness," adding, "They built the market from the ground up, and now restricting management rights for the sake of public interest is unreasonable."

There are growing claims that depriving previously established property rights through retroactive legislation could be unconstitutional. In a written response to Assemblyman Kim Sanghoon's inquiry, the National Assembly Research Service stated there is potential unconstitutionality regarding property rights, freedom of occupation and business activities, and retroactive legislation. It explained that stocks are property rights protected by the Constitution and that the freedom to hold and dispose of them must also be guaranteed; tying major shareholder restrictions to license cancellation could infringe on property rights.

The research service further noted that if restrictions on major shareholders’ stakes make it impossible to maintain management rights or require changes in governance, this could also limit the business freedom of both major shareholders and virtual asset exchanges, as well as holding companies. It assessed that regulations imposing immediate forced disposal or full voting rights restrictions on shares lawfully acquired in the past could constitute true retroactivity, and unless there are special circumstances (such as significant public interest), such regulations could be found unconstitutional.

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