South Korea is preparing new rules for the cryptocurrency industry that will limit how much control major shareholders can have in crypto exchanges. The goal of this policy is to create a healthier balance between market growth and proper management.

Under the proposed plan, the country’s ruling Democratic Party together with the Financial Services Commission want to restrict the ownership of major shareholders in domestic crypto exchanges to 20 percent. However, new companies entering the market may be allowed to hold up to 34 percent ownership in the early stages to help them establish their businesses.

Large cryptocurrency platforms such as Upbit and Bithumb will be given three years to adjust their ownership structures to meet the new requirement. Smaller exchanges will have an extra three-year grace period, giving them more time to comply with the regulation.

Currently, ownership in many exchanges is far higher than the proposed limit. For example, Upbit has around 25.5 percent, Bithumb about 73.6 percent, and Coinone roughly 53.4 percent ownership held by major shareholders. Meanwhile, a planned acquisition of Korbit could result in Mirae Asset Consulting controlling as much as 92 percent, which shows how concentrated ownership has become in the industry.

Regulators believe these limits are necessary to reduce risks related to excessive control by a small number of shareholders. The issue became more urgent after an incident where Bithumb mistakenly transferred about $43 billion worth of Bitcoin, raising concerns about internal management and oversight.

These ownership restrictions are expected to become part of South Korea’s upcoming Digital Asset Basic Act, which will also introduce regulations related to stablecoins and crypto exchange-traded funds (ETFs).

Overall, the government hopes these measures will strengthen transparency, improve governance, and support a safer and more stable crypto market in the country.#Binance