South Korea Eyes Major Crypto Investment Cap Expansion for Corporations

Seoul signals a regulatory pivot that could unlock billions in institutional capital.

The Regulatory Shift

South Korea's financial authorities are drafting proposals to significantly raise the limits on corporate cryptocurrency holdings. The move targets current rules that critics say stifle innovation and push investment offshore. It's a direct response to growing demand from domestic tech firms and asset managers seeking exposure to digital assets.

Capital Unchained

Lifting the caps wouldn't just be a paperwork exercise—it would fundamentally alter the balance sheet strategy for a swath of Korean industry. Think less about dipping a toe in, more about strategic allocation. The change acknowledges crypto's evolution from speculative fringe asset to a legitimate, if volatile, component of modern finance. Expect treasury departments to start running the numbers.

The Ripple Effect

This isn't happening in a vacuum. Watch for correlated movements in exchange volumes, custody service demand, and even corporate M&A activity as companies seek crypto-native expertise. It also piles pressure on other Asia-Pacific financial hubs to review their own restrictive frameworks or risk losing capital and talent. The global race for crypto relevance just found another serious contender.

A cynical take? Traditional finance spent years building moats; crypto just showed up with a submarine. South Korea's potential rule change isn't about embracing risk—it's about finally admitting that the profit opportunity has become too large to ignore with a straight face.

Crypto for corporate survival

Iris (Sungyoun) Park, is co-founder of South Korean web3 consultancy firm DELV and an attorney specializing in crypto. She told Cryptopolitan that there is tremendous corporate interest in diversifying portfolios with digital assets.

“Diversification is absolutely vital for the survival of companies these days. South Korea is experiencing ongoing disparities in the value of assets which you can see with house prices and gold skyrocketing while the price of bitcoin is not.”

She said a lot of companies in Korea are not only interested in holding crypto but also holding stablecoins for settling international trade.

“There is a common understanding that crypto is a way to keep up to date with global business.”

But Park doesn’t necessarily agree that authorities are in a rush to increase the equity cap as the country is moving to establish spot bitcoin ETF trading as part of its economic growth strategy.

Crypto infrastructure as a public good

Korean authorities are cautiously integrating crypto into the financial system. However, there are concerns of a growing asymmetry over ownership of crypto infrastructure. The government’s controversial plan to limit major shareholders’ stakes in crypto exchanges to between 15 to 20%.

The Financial Services Commission (FSC) have said a cap would help avoid conflicts of interest. FSC Chairman Eog Weon Lee explained that crypto exchanges have become a FORM of public infrastructure and the cap is needed to align governance standards on crypto exchanges in light of the public role they play.

“As crypto exchanges are now officially recognised as part of the financial system, we must create a governance structure that befits their status,” stressed Lee at a press conference on January 28.

Stablecoin turf war

Rich O stressed the MOVE is not concerned with user protection but rather control over the future distribution of KRW stablecoins.  

“Government agencies don’t want only a few crypto exchanges, such as Upbit and Bithumb, to have major control over the distribution of upcoming KRW stablecoins.”

He said the policy is an attempt to weaken the influence of major shareholders.

“They want to diversify ownership by breaking it into smaller shareholders, making crypto exchanges easier to negotiate with or control,” said Rich O.

The proposal could force the co-founder of Dunamu and operator of Korea’s largest crypto exchange, Chi Hyung Song, to sell a 10% stake of his existing 25% ownership of Dunamu which equates to some 3 trillion KRW.

The ownership cap could also thwart South Korean internet giant Naver’s plans to acquire Dunamu which would see it take control of 100% of Dunamu’s shares.

Ownership limits defy global norms

The shareholder cap has attracted fierce criticism from the Digital Asset eXchange Alliance (DAXA), which represents South Korea’s five largest cryptocurrency exchanges. They said the restriction would hinder the growth of the industry.

At Korea’s National Assembly, a group of scholars argued against the cap, describing it as “excessive” and globally unprecedented.

Professor Yoon Kyung Kim from Incheon National University said a diverse ownership base typically emerges as companies grow and raise capital, rather than being imposed at the outset.

Innovation is at stake

She said artificially ordering shareholder equity restrictions could increase management uncertainty, delay large investment decisions, and ultimately weaken national competitiveness and Korea’s fintech innovation ecosystem. 

Professor Cheol WOO Moon from Sungkyunkwan University added that forcing shareholders to sell equity could amount to an infringement of the rights of private entrepreneurs and could face legal disputes and constitutional appeals.

Corporate crypto analyst Rich O doesn’t believe the proposal will gain momentum. But FSC Chairperson Eok Won Lee said he was committed to implementing the crypto exchange shareholder cap.

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