Debate has erupted over whether the Democratic Party of Korea's policy committee and the Financial Services Commission's plan in the second-phase virtual asset law (Digital Asset Basic Act) to cap the equity held by major shareholders of virtual asset exchanges is unconstitutional. The virtual asset industry argues that creating a new law to force existing major shareholders to sell their equity deprives people of property rights, which are basic rights under the Constitution. Others counter that dispersing equity for the public interest is not unconstitutional.
The government and the Democratic Party of Korea's policy committee are pushing a plan to limit major shareholders of virtual asset exchanges to holding only 15%–20% equity. Currently, except for Upbit, major shareholders' equity at domestic virtual asset exchanges all exceeds 50%, so if the bill passes, they will have to dispose of large portions of their equity.
There are claims that forcing the sale of equity in this way violates the constitutional principle of proportionality. Hwang Hyun-il, Head of Team and attorney at Shin & Kim LLC's virtual asset team, said, "Risk factors at exchanges can be managed through policy tools such as strict major shareholder fit-and-proper reviews, stronger internal controls, and conflict-of-interest regulations. Even though alternatives exist, forcibly restricting ownership runs afoul of the principle of proportionality and appears unconstitutional."
Some also argue that the cap on major shareholders' equity is unconstitutional because it retroactively strips property rights that have already formed. Lee Dong-jun, managing attorney at YulAm LLC, said, "There are cases where policymakers' discretion is recognized more broadly than the law. However, under the constitutional principle of statutory reservation, matters that directly restrict basic rights cannot be left to subordinate rules." He added, "There are potential constitutional issues throughout, so if the bill actually passes, the industry is highly likely to seek a constitutional review."
By contrast, some say there is no constitutional issue with capping major shareholders' equity based on the "balance of legal interests." They argue it does not violate the Constitution because the social objective (public interest) that can be achieved is greater than the basic rights (private interests) infringed by limiting major shareholders' equity.
Lee Jeong-young, managing attorney at Law Butler, said, "Domestic exchanges have already operated for years in a regulatory blind spot and enjoyed the privilege of being valued in the trillions of won. Allowing a few individuals and corporations to monopolize such a powerful financial infrastructure is far too risky." Lee added, "Even if a cap on major shareholders' equity is implemented, only a very small number of individuals and corporations would be affected. The public interest gained is far greater than the basic rights infringed by the equity cap."