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Korean regulator targets concentrated control at crypto exchanges in phase 2 bill

Policy & Regulation·December 31, 2025, 5:21 AM

South Korea’s financial regulator is preparing a second major cryptocurrency bill that would expand investor protections, strengthen stablecoin safeguards, and potentially impose governance changes at the country’s largest exchanges, as domestic token projects warn that regulatory uncertainty is curbing growth.

 

The Financial Services Commission (FSC) is drafting the Digital Asset Basic Act, a so-called “phase two” bill that follows an earlier virtual asset user protection regime which took effect in July 2024.

 

According to Yonhap News, the bill is expected to address stablecoin risks by requiring issuers to hold reserve assets in instruments such as bank deposits and government bonds, and to deposit or place in trust at least 100% of outstanding issuance with banks or other designated custodians. It would also extend existing financial-sector rules to crypto firms in areas including disclosures, terms and conditions, and advertising. In addition, the proposal could impose no-fault liability on virtual asset service providers for losses stemming from hacks or system failures, in line with standards under Korea’s Electronic Financial Transactions Act, which governs traditional financial institutions and payment services.

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Governance dominance at exchanges

A separate report by KBS said the draft bill includes measures to overhaul governance at South Korea’s four major crypto exchanges—Upbit, Bithumb, Coinone, and Korbit—which together serve about 11 million users. The FSC has raised concerns about concentrated control by founders and major shareholders, and is considering a governance framework similar to that applied to alternative trading systems (ATS) under Korea’s Capital Markets Act. That could include limits designed to prevent any single shareholder from holding too much control, capping controlling stakes at around 15% to 20%.

 

Under Korea’s current Capital Markets Act, an ATS is generally barred from holding more than 15% of voting shares, including those held by related parties, with limited exceptions allowing stakes of up to 30%. If similar limits were applied to crypto exchanges, the changes could affect Dunamu, the operator of Upbit.

 

Dunamu Chairman Song Chi-hyung holds a stake in the mid-20% range and, under the proposal as described, could face pressure to sell roughly 10% of his holdings. The proposal could have implications for the deal, as Dunamu is pursuing a merger with Naver Financial through a comprehensive stock swap.

 

While the bill’s broad outlines are taking shape, regulators are still working to narrow differences over stablecoin rules, and the final proposal is expected to be submitted to the National Assembly next year. Key unresolved issues include eligibility requirements for stablecoin issuers, whether to establish an interagency consultative body during the licensing process, initial capital thresholds, and whether a single entity should be allowed to both issue and distribute stablecoins.

 

The core dispute centers on who should be allowed to issue stablecoins. The Bank of Korea is said to favor limiting issuance to consortia in which banks hold at least a 51% stake, while the FSC is believed to oppose writing a mandatory bank ownership threshold into law, arguing that such a requirement could limit broader participation by technology firms.

 

‘Kimchi coin’ listings stall amid caution

Even as policymakers push ahead, regulatory uncertainty is curbing growth among South Korean blockchain projects. News1 reported that Upbit listed only one token from a domestic project in 2025, out of 54 tokens added for trading since the start of the year—the native token of Story, a peer-to-peer intellectual property network powered by blockchain and co-founded by Korean entrepreneur Lee Seung-yoon.

 

Upbit also removed 10 tokens during the period, seven of which were so-called “kimchi coins,” a colloquial term for tokens originating in South Korea or developed by Korean teams. Industry participants attribute the removals to increasingly risk-averse behavior by exchanges amid regulatory uncertainty, which can complicate promotional efforts and trust-building while constraining early-stage liquidity.

 

TradFi players seek crypto integrations

While local token projects face headwinds, interest from traditional financial institutions appears to be picking up. Chosun Biz reported that Mirae Asset Financial Group is considering an acquisition of Korbit, with its non-financial affiliate Mirae Asset Consulting seen as a potential buyer of shares from major shareholders NXC and SK Planet. Industry analysts estimate the deal could be worth up to 140 billion won ($97 million).

 

The group’s founder, Park Hyeon-joo, has said he is developing a strategy to bridge traditional and digital assets, arguing that it is time to prepare for the next wave of financial innovation.

 

In payments, EBN Industrial News reported that BC Card has signed a memorandum of understanding (MOU) with U.S.-based crypto exchange Coinbase to test USDC payments in South Korea. The pilot would integrate BC Card’s QR payment system with wallets on Coinbase’s Base blockchain to assess whether USDC can function as a viable payment method at local merchants.

 

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Web3 & Enterprise·

May 10, 2023

Zero Two Enters Into JV to Develop First Middle East Mining Op

Zero Two Enters Into JV to Develop First Middle East Mining OpZero Two, a digital assets development company based in Abu Dhabi in the United Arab Emirates (UAE), has partnered with leading North American crypto miner Marathon Digital in a joint venture that will result in the development and operation of the Middle East’s first large-scale crypto mining facility.Photo by Manuel Geissinger on PexelsInitial capacity of 250 MWIn a press release issued on Tuesday, Marathon Digital outlined that the venture is focused on accelerating the global digital economy while also supporting Abu Dhabi’s power grid.To progress the project, the two companies have formed the Abu Dhabi Global Markets JV Entity (AGDM Entity). Initially, two digital asset mining facilities, with a combined capacity of 250 MW, will be developed.One site, at Masdar City, Abu Dhabi, will account for 200 MW of that capacity. The remaining 50 MW capacity will be developed at a site located in the port area of Mina Zayed. The strategy of the firms is to exploit excess network energy in Abu Dhabi. The firms see this as a win/win as increasing the base load of the Abu Dhabi power grid will result in a more sustainable grid. The companies intend to supplement any use of non-sustainably produced energy with carbon offset certificates.80/20 equity splitThe two firms have agreed upon an 80%/20% equity split, with Zero Two being the lead investor. In the initial development period for the venture during 2023, both entities will contribute resources to the joint venture in proportion to the equity division, in the form of capital, equipment and infrastructure.Zero Two and Marathon had previously collaborated on a pilot project with the objective of determining the feasibility of building a large-scale facility. Air-cooled miners have not proven to be a success in hot arid climates like that of the Rub Al Khali Middle Eastern desert.The upshot of the pilot program was a determination that a custom-built immersion-cooled system would be feasible. Mining equipment for the facilities is already on order while construction at the two sites is underway. Both sites are expected to go online before the end of the year with a combined hashrate of 7 EH/s.Ahmed Al Hameli commented on the joint venture: “This alliance leverages Zero Two’s regional expertise, expansive relationships, and growing blockchain infrastructure development and operational capabilities, with Marathon’s technical prowess in developing digital asset sites and innovative mining technologies.These synergies create a powerful combination and lay the groundwork for the success of this pioneering project in the Middle East. Marathon shares our commitment to actively supporting Abu Dhabi’s power grid and developing global digital assets infrastructure. We look forward to working with them on this venture.”Jurisdictional arbitrageMarathon’s CEO Fred Thiel said that Zero Two’s regional relationships were an optimal compliment. It may be both a timely and shrewd move by Marathon to develop this project in the Middle East region. In recent weeks the Biden administration floated the idea of a 30% crypto mining tax. Crypto mining is a global endeavor.That type of additional overhead would make it very difficult for North American miners to remain viable. By opening up new working relationships in other regions, the company may be in a better position to pivot should North America and the firm’s Montana-based mining facility become unsustainable.

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Markets·

Jul 11, 2023

Singapore and the Philippines Lead Crypto Interest in Southeast Asia

Singapore and the Philippines Lead Crypto Interest in Southeast AsiaSingapore and the Philippines have emerged as the frontrunners in Southeast Asia’s crypto landscape in 2023, capturing the majority of regional interest.Research carried out by Malaysian cryptocurrency data aggregator CoinGecko reveals that on a per capita basis, Singapore holds a 43.5% share of crypto interest, followed closely by the Philippines with 40.3%.Photo by Kenneth Koh on UnsplashRegional crypto hubSingapore has established itself as a crypto hub not only within Southeast Asia but also in the wider Asia region. It was previously ranked as the third most crypto-curious country globally and has consistently been one of the top Web3 gaming countries for three consecutive years.Other countries in Southeast Asia, including Malaysia, Thailand, Vietnam, and Indonesia, also contribute to the region’s crypto interest, although at more modest levels. Combined, these countries represent 14.7% of the per capita crypto interest in the region so far this year.GameFi driving interestIn the Philippines, crypto interest is primarily driven by GameFi, and the country has maintained its position as the leading Web3 gaming country from 2021 to 2023. The Philippines witnessed the Axie Infinity mania, with local gaming guilds and inspiring rags-to-riches success stories. Additionally, it was among the top countries embracing meme coins earlier this year, alongside Malaysia.Vietnam shares a strong interest in GameFi, placing it among the top Web3 gaming countries for three consecutive years. Thailand and Indonesia have witnessed substantial trading volumes on their crypto exchanges, with $37.94 billion and $23.97 billion respectively in 2022.Notably, Malaysia has a significant presence in the crypto industry, despite its relatively smaller impact. The country is home to two prominent crypto data tools, CoinGecko and Etherscan, which were founded by Malaysian teams and are headquartered in the country.In contrast, smaller Southeast Asian economies such as Cambodia, Myanmar, Brunei, Laos, and Timor-Leste have a combined share of only 1.5% of regional crypto interest per capita. While these markets remain largely untapped, their low adoption rates are unlikely to improve in the near term. Except for Brunei, which is a wealthy nation, the smaller Southeast Asian economies are categorized as lower-middle income countries.Regarding the specific cryptocurrencies drawing attention in Southeast Asia in 2023, Layer 1, GameFi, meme coins, and DeFi-related crypto have emerged as the most popular categories. The top-ranking cryptocurrencies within these narratives account for 22.2% each of the region’s interest so far this year.The Philippines, as the top Web3 gaming country, showcases three GameFi cryptocurrencies — Smooth Love Potion (SLP), Ronin (RON), and Wemix (WEMIX) — among its most popular choices. Malaysian investors also show interest in DeFi projects like Maple (MPL) and BoringDAO (BORING), in addition to Bitcoin.Singapore’s popular crypto choices include The Graph (GRT), Bitcoin (BTC), and Pepe (PEPE). Vietnam demonstrates ongoing interest in Aptos (APT) and privacy tool Bob (BOB), while Thailand focuses on Gala (GALA) and Canto (CANTO). Finally, Indonesia monitors Not Financial Advice (NFAI) and AirSwap (AST).Overall, Singapore and the Philippines lead the way in crypto interest within Southeast Asia, while other countries in the region also contribute to the evolving crypto landscape.

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Web3 & Enterprise·

Mar 13, 2025

SGX to list Bitcoin perpetual futures in H2

Singapore Exchange Limited (SGX), the city-state’s primary asset exchange, is in the process of establishing Bitcoin perpetual futures trading on the platform.Photo by Kanchanara on UnsplashInstitutional product offeringAccording to a report published by Bloomberg earlier this week, the exchange platform intends to launch Bitcoin futures sometime during H2 2025. The product launch will be subject to regulatory approval from the Monetary Authority of Singapore (MAS). A spokesperson for the company told Bloomberg that the product offering will be geared exclusively towards institutional investors and traders in an effort to “significantly expand institutional market access.” Retail access to the product will be prohibited. Once launched, these Bitcoin perpetual futures contracts, being offered through a traditional finance (TradFi) outfit like SGX, will help to blur the lines between TradFi and the emerging crypto sector. Perpetual futures have no expiry date. They offer a means for traders to bet on price changes in an underlying asset while doing away with the need to take ownership of the asset itself. Cautious approachSGX has been cautious in listing crypto assets and derivative products. Last year the firm’s CEO, Loh Boon Chye, said that the time was not yet right for such listings.  His concern back then was that any such product launches would need “sustainable ecosystem support,” adding that “that means demand, that means governance, that means structure.” While spot Bitcoin exchange-traded funds (ETFs) had been approved in the United States at that point, there has been much further development in the crypto-sphere since then, following the election of a pro-crypto administration in the U.S. That event has had knock-on effects globally. Singapore’s SGX isn’t the only traditional exchange platform to respond. Japanese futures exchange, the Osaka Dojima Exchange (ODEX), is gearing up to file an application with the Financial Services Agency (FSA) to list a Bitcoin futures product later this month. Closer to home, an American digital asset marketplace that focuses on institutional trading, EDX Markets, has plans to introduce Bitcoin perpetual futures products to the Singaporean market, according to a report which emerged in January. In May 2024, EDX launched EDXM Global, a settlement platform, in Singapore. This product launch by SGX serves the purposes of decision-makers in Singapore, who have been trying to position the city-state as a digital asset industry hub. Additionally, the move will bring greater acceptance of the digital assets sector from traditional market participants. Crypto perpetual futures contracts were first pioneered by crypto derivatives exchanges like BitMEX back in 2016. Since then, other crypto-native platforms like Binance and OKX have offered these products. In the case of unregulated offshore exchanges, the products have proven to be controversial, as at times, they have been used in a manner that has exposed market participants to counterparty risk. Failed crypto exchange FTX, together with its sister company Alameda Research, relied on the products in their trading activities. SGX, as a seasoned, regulated TradFi operator, which holds an Aa2 rating from Moody’s, is likely to prove to be a more palatable option for institutional players.

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