South Korea’s National Assembly has approved broad amendments that tighten the bar for virtual asset service providers and expand criminal-background screening to major shareholders. Regulators are clearly signaling that exchanges are no longer being treated like lightweight tech platforms, but as market infrastructure with a higher public-duty threshold.
A key change is who gets vetted and how far the screening goes. Major shareholders—defined as anyone holding 10% or more of shares or voting rights—will be subject to the same criminal checks that historically focused on executives, and the disqualifying-offense list now extends beyond classic financial crimes to include drug trafficking, tax evasion, fair-trade violations, serious economic crimes, and breaches of the Virtual Asset User Protection Act. The message is that “who owns the exchange” is now as important as “who runs it.”
A Wider Compliance Perimeter for Ownership and Operations
The revisions also expand the Korea Financial Intelligence Unit’s oversight toolkit. The FIU can assess financial soundness, social credibility, internal controls, and legal compliance, giving supervisors more room to evaluate whether a platform is fit to operate—not just whether it meets minimum paperwork standards. This is a shift toward holistic supervision, where governance quality becomes a licensing variable, not a nice-to-have.
Importantly, regulators are also leaning into “conditional approvals” as an enforcement lever. That tool allows an exchange to keep operating while being required to implement specific AML and user-protection measures, which can reduce sudden market disruption even as it increases ongoing remediation costs and reporting obligations. In practice, it turns compliance into a living program that can be tightened while the business stays online.
Another structural plug-in the amendments introduce is a notification and recordkeeping duty around sanctions tied to former executives. Companies must document sanctions, notify as required, and keep records robust enough to prevent evasion by resignation or role changes. It’s a governance tightening that closes an obvious loophole: people shouldn’t be able to step away from a title and take the risk with them.
Ownership Caps Are the Next Pressure Point
Alongside the amendments, the Financial Services Commission has advocated for ownership caps generally in the 15%–20% range for major shareholders, and the plan is to fold that proposal into the Digital Asset Basic Act. A legislative vote is expected in February 2026, with implementation measures scheduled around August 2026, creating a clear runway for the market to price in potential changes. If these caps land as described, some exchange cap tables may need to be rebalanced to stay inside the perimeter.
FSC Chairman Lee Eog-weon framed the caps as a governance necessity, arguing that imposing ownership limits is needed to match the growing public importance of virtual asset exchanges. That framing is less about punishment and more about institutionalizing accountability by reducing extreme concentration at the ownership layer.
For investors and institutional entrants, the net effect is a higher-cost, higher-clarity operating environment. The combination of expanded vetting, stronger FIU assessment powers, and potential ownership caps points to more governance spend and fewer founder-concentration models, but also fewer concentration-driven tail risks. The immediate checkpoints to watch remain the February 2026 vote on the Digital Asset Basic Act and the follow-through into the August 2026 implementation window, which will determine how quickly ownership structures, licensing expectations, and institutional participation patterns start to shift.