Stake Cap Clash: South Korean Crypto Exchange Regulation Hits Snag

The National Assembly Research Service (NARS) has released an analysis on the proposed cap on major shareholders' stakes in virtual asset exchanges, which could conflict with existing holding company ownership requirements under South Korea's Monopoly Regulation and Fair Trade Act.

According to the report submitted to Rep. Park Min-kyu of the Democratic Party of Korea, capping a major shareholder's stake at 20% in principle, or up to 34% under certain conditions, could create a structural mismatch with the act's mandate that holding companies maintain minimum ownership thresholds in their subsidiaries.

The report noted that for a holding company to treat an exchange as a subsidiary, it would need to hold more than 50% of the equity, yet the proposed cap is only 34%, making it impossible to satisfy both sets of rules simultaneously.

However, the Korea Fair Trade Commission (KFTC) offered a similar interpretation, stating that while the two regulations are formally at odds, they cannot be viewed as a general conflict in every instance due to their differing regulatory purposes and targets.