The financial regulators of South Korea have introduced a 20% ownership limit on cryptocurrency exchange to investors.
This is a new rule that is troubling Bitcoin investors as the government continues to control its crypto sector.
The proposal is being discussed in the National Assembly, and its passage may have an impact on the global crypto sentiment.
New Regulation Could Reshape South Korea’s Crypto Market
The ownership regulation is meant to restrict the accumulation of shareholding strength by shareholders in crypto exchanges.
According to the new guidelines, all trading platforms will have key shareholders who will only own up to 20% of the shares of a platform.
This is applicable to large exchanges such as Upbit and Bithumb that dominate about 90% of the domestic market.
Smaller transactions with less market share than a certain amount will be allowed more time to amend, with a six-year period to amend.
The proposal has, however, not been received well.
The Digital Asset Exchange Alliance (DAXA), the leading exchanges in South Korea, claims that the cap would impede the development of the market and its integrity.
Irrespective of this resistance, the ownership limit is also a subset of a larger initiative by the South Korean government to have more stringent regulations in the cryptocurrency market.
Regulatory Changes Will Affect Future Crypto Licensing
South Korea has a bigger initiative in reforming its crypto-regulations, including the ownership cap.
Policymakers have also ratified the changes in the licensing procedure of the virtual asset service providers that would now demand a greater range of background checks on the executives and large shareholders.
The updated system will enable the authorities to enquire about possible participation in unlawful operations, including tax evasion and financial fraud, in the process of licensing.
These developments are tied to the increasing worries of transparency and security in the crypto industry.
Some of the stakeholders are also responding by saying that overrestrictions may stifle competition and retard innovation.
They also raise concerns that this would pose a high entry barrier to new entrants in the market.
Impact of the Ownership Cap on Bitcoin and Global Crypto Markets
Although the ownership cap is aimed at local exchanges in particular, its possible effects on the trading of Bitcoin cannot be disregarded.
The investors in Bitcoin are keeping a close eye on the event, where drastic changes in regulation in South Korea, a key crypto market, can affect the sentiment in the world.
Currently, the Bitcoin price has not changed significantly and stands firm at over $72,870 with an increment of 7% over the past 24 hours.
These regulations will be fully implemented once the bill has been passed by the National Assembly, which is still in the initial stages.
The proposal is being resisted not only by the opposition but also by a number of the ruling party members.
Despite the political challenges, the regulatory reforms in South Korea may serve as a precedent in other countries of the international cryptocurrency market.
Ongoing Developments in South Korea’s Crypto Regulatory Landscape
Having the ownership cap, the National Assembly of South Korea is also discussing other frameworks, like the Capital Market and Financial Investment Business Act, which can further control the digital asset space.
Lawmakers are pressuring towards transparency, and some legislators insist that people in the crypto trading disclose their holdings and the existence of any conflicts of interest.
The future of the crypto market in South Korea remains unclear, with these regulations still encountering the legislative process.
Amid the evolving situation, investors worldwide are closely monitoring the potential impact on the broader crypto market. The situation in South Korea may indicate the future development of the regulation of crypto in other countries.
