As the Bitcoin mispayment incident at the virtual asset exchange Bithumb adds momentum to calls to cap exchanges' major shareholders' equity stakes, the political sphere is reviewing a plan to apply equity limits differentially based on market share. The government, as it formally licenses virtual asset exchanges, is pushing to cap major shareholders' equity at 15%–20%, and in that case, to obtain a license, a major shareholder would have to sell any excess equity to a third party. The financial authorities are said to prefer a plan that brings institutional financial firms such as banks or securities companies in as shareholders.
According to political circles and the financial authorities on the 23rd, the Democratic Party of Korea plans to introduce the second-stage virtual asset legislation, the "Digital Asset Basic Act," as early as the end of this month. The party's policy committee is said to be preparing a bill reflecting the financial authorities' view that the equity of major shareholders in virtual asset exchanges should be dispersed to reduce the likelihood of risk factors.
Some within the People Power Party and the Democratic Party oppose capping major shareholders' equity in exchanges, but the financial authorities maintain that major shareholders' equity should be limited to around 15%–20%.
The financial authorities are said to want a plan under which large financial firms, such as banks or securities companies, join as shareholders to ensure the stable operation of virtual asset exchanges. They are designing the Digital Asset Basic Act based on current regulations, including equity caps on major shareholders of alternative exchanges. Under the Financial Investment Services and Capital Markets Act, financial companies and public offering funds can secure up to 30% equity in alternative exchanges with approval from the Financial Services Commission.
The idea is that if virtual asset exchanges structure their shareholders with large financial firms and financial investors (FI), the financial authorities will assess suitability and grant licenses. An official at the financial authorities said, "If equity limits become reality, wouldn't financial firms or FIs join as shareholders?"
The political sphere is also considering a plan to apply equity limits differentially based on exchanges' market share. Exchanges with a market share of 50% or more would be required to cap major shareholders' equity at 15%–20% or below. Dunamu, which operates Upbit, currently has a market share in the 60%–80% range. If the 15% equity cap is applied, Dunamu Chairman Song Chi-hyung would have to transfer more than 10 percentage points from his 25.52% holding to a third party.
For Dunamu, which is set for a comprehensive stock exchange with NAVER's subsidiary NAVER Financial, the new equity regulations have emerged as a major variable for the merger.
Bithumb, which has a market share in the 20%–30% range, is 73.56% owned by Bithumb Holdings. Even if equity limits are applied differentially and Bithumb Holdings is allowed to hold up to 30% equity, it would still have to hand over more than half to a third party. Specific measures such as differential application of equity limits are expected to be included in subordinate regulations such as enforcement decrees after the bill is introduced.
A senior official at the financial authorities said, "When a virtual asset exchange is licensed and gains a permanent status, it becomes infrastructure with the character of a public good," adding, "Because an exchange is being granted a new status, its equity structure needs to be changed accordingly."