Extension of Bithumb 'Ghost Coin' Inspection... Authorities Push 'Equity Caps' While Academia Calls for 'Functional Separation' [Crypto Briefing]

Financial authorities have extended their on-site inspection of Bithumb in connection with the "Bitcoin (BTC) mispayment incident" and have begun reviewing virtual asset service providers’ internal control systems. As part of efforts to strengthen internal controls, they are pushing to institutionalize limits on the equity stakes of major shareholders in virtual asset exchanges. Academic experts, however, argue that the incident stems from exchanges’ monopoly over multiple functions—trading, brokerage, custody, and settlement—rather than from ownership concentration alone.
According to the National Assembly and financial authorities on the 20th, the FSS has extended its on-site inspection of Bithumb over the 60 trillion won Bitcoin mispayment case until the end of this month. Since October 10, authorities have been examining Bithumb for possible violations of user protection and anti-money laundering obligations. They have also set up an emergency response team to review the asset verification systems and overall internal controls of four other exchanges—Upbit, Coinone, Korbit, and GOPAX.
The financial authorities plan to reflect any shortcomings identified during the on-site inspections and examinations in the second-stage legislation of the General Act on Digital Assets. Under the licensing regime envisioned by the Act, virtual asset exchanges would be treated as public infrastructure, and the authorities intend to include in the basic law a regulation capping major shareholders’ ownership stakes at around 15–20%.
Some experts, however, contend that the structural cause of the Bithumb incident lies not in exchanges’ "ownership monopoly" but in their "functional monopoly." Lee Jung-soo, a professor at Seoul National University School of Law (SNU Law), noted, "In traditional capital markets, securities companies handle brokerage, the Korea Exchange (KRX) handles trade execution, and the Korea Securities Depository (KSD) handles custody, allowing for cross-checks among them. In contrast, virtual asset exchanges perform all these functions alone, making effective cross-verification difficult." He stressed that, over the medium to long term, the second-stage legislation should focus on "functional separation" that distributes trading, brokerage, and custody functions across different entities.
Lee also explained that virtual asset exchanges operate more as private brokerage platforms than as public markets like the Korea Exchange (KRX). "Forcing post hoc dispersion of equity ownership in virtual asset exchanges could raise constitutional concerns over infringement of property rights and retroactive regulation," he warned. He added, "The fundamental question is not 'who owns the exchange' but 'how it is supervised,' including continuous fit-and-proper assessments of major shareholders."
Major advanced economies likewise focus on continuously assessing the fitness of controlling shareholders in virtual asset exchanges, rather than imposing hard caps on ownership stakes.
According to the Digital Economy Research Institute under the Korea Internet Corporations Association, the New York State Department of Financial Services (NYDFS) requires prior approval and rigorous fit-and-proper reviews whenever there is a change in control, such as a shift of 10% or more in voting rights, under its BitLicense framework. The European Union (EU), through its Markets in Crypto-Assets Regulation (MiCA), operates a review system that allows authorities to assess shareholders’ and executives’ reputations and the adequacy of internal controls when a "qualifying holding" in a virtual asset service provider is acquired. Japan, for its part, obliges exchanges to notify regulators after any change in major shareholders, after which supervisors re-examine the exchange’s governance and internal control systems.
Kwon Jae-han, a research fellow at the Digital Economy Research Institute, argued, "Forcibly restructuring the ownership of private companies after the fact poses a serious risk of infringing constitutionally protected property rights and undermines responsible management."
elikim@fnnews.com Kim Mi-hee Reporter