Government Limits on Crypto Exchange Ownership Spark Industry Backlash
The South Korean cryptocurrency industry is facing significant challenges due to proposed government regulations limiting ownership stakes in local exchanges. The Financial Services Commission (FSC) has suggested capping ownership at 20% for major shareholders in domestic crypto exchanges. This proposal has sparked backlash from industry leaders and stakeholders.
Details of the Proposed Ownership Cap
The FSC’s plan aligns with existing laws governing capital markets, which also impose a 20% limit on alternative trading systems (ATS). The reasoning behind this regulation is to prevent excessive control by a few shareholders over the management and operations of exchanges.
- Current Ownership Stakes: Operators of major exchanges currently hold between 25% and 73% of their respective stakes.
- Industry Concerns: The Digital Asset Exchange Alliance (DAXA) claims that this restructuring could harm Korea’s competitiveness in the global digital asset market.
- Impact on Users: DAXA argues that the cap might push users towards offshore exchanges, potentially compromising customer asset protection.
Political Implications
The controversy is escalating into a political debate. Lawmakers from the main opposition party, People Power Party (PPP), are set to address the concerns raised by crypto exchanges during an upcoming policy meeting. This meeting will be key in determining how the opposition will respond to the ruling Democratic Party of Korea (DPK).
On Wednesday, the PPP’s special committee on stock and digital asset will convene with DAXA and industry representatives at the National Assembly. Lawmakers, including committee member Kim Sang-hoon, will discuss the ownership cap and other critical issues related to digital asset legislation.
Responses from the Industry
Industry representatives issued strong statements against the FSC’s proposal. They argue that the ownership limits could stifle the growth of Korea’s digital asset sector and reduce management accountability. The exchanges fear that such stringent measures could generate market uncertainty, impacting startups and venture capital investments vital to the ecosystem.
As the situation evolves, all eyes are on the outcome of the PPP’s decisions during this crucial policy meeting. The response from lawmakers could significantly influence the landscape of South Korea’s cryptocurrency regulations and its standing in the global market.
