DPK Digital Assets TF advisory panel opposes ‘exchange ownership caps’… “Must move beyond a government-control mindset”

The advisory committee to the Democratic Party of Korea’s Digital Assets Task Force (TF) has pushed back against the government’s plan to cap controlling shareholders’ stakes in virtual-asset exchanges.

According to the industry on the 4th, the panel said in an opinion paper submitted to the TF that day that “if the government signals that it views new industries only as targets for control and management through a government-directed lens, it will be hard to expect entrepreneurship and innovation,” adding that “limits on (controlling shareholders’) ownership stakes could send a negative signal not only to the digital-asset industry but across the broader startup ecosystem.” The opinion paper was signed by Kim Gap-rae, senior research fellow at the Korea Capital Market Institute; Kim Hyo-bong, an attorney at Bae, Kim & Lee LLC; Seo Byung-yoon, head of the Future Finance Research Institute at DSRV Labs; and Kim Jong-seung, CEO of Xcrypton, among others.

What the panel targeted was the proposed cap on controlling shareholders’ ownership stakes. The Financial Services Commission has maintained its stance during the legislative process for the Digital Assets Basic Act that controlling shareholders’ stakes in virtual-asset exchanges should be limited to 15–20%, citing the need to take into account the exchanges’ public nature.

The panel rebutted the FSC’s position. It said, “At a time when legislation for the Digital Assets Basic Act is approaching, the FSC’s proposal to cap ownership stakes is emerging as an unexpected variable,” and pointed out that “unless they are converted into public enterprises, the claim that reducing controlling shareholders’ stakes would directly translate into enhanced public interest is a logical leap.” It added, “Strengthening accountability and public interest, and resolving conflicts of interest, are important policy goals,” but “whether an ownership cap is an appropriate and effective means to achieve those goals requires separate, in-depth discussion.”

It also raised constitutional issues. The panel said, “A retroactive approach of pushing already-established ownership stakes down below a certain threshold could conflict with the basic principles of shareholder capitalism,” adding that “it would be difficult to resolve the constitutional issue of restricting property rights solely on concerns over oligopoly or conflicts of interest.”