South Korea's FSC Chief Questions 15% Crypto Exchange Cap Amid Market Monopoly

VADODARA, February 5, 2026 — South Korea's Financial Services Commission (FSC) Chairman Lee Eok-won expressed a reserved stance today on a government proposal to cap major shareholder stakes in cryptocurrency exchanges at 15%. During a briefing to the National Assembly's Political Affairs Committee, Lee suggested tiered ownership rules, questioning investment and innovation under a uniform cap. This daily crypto analysis examines the regulatory implications for market structure and liquidity.

Investigation: FSC Chairman's Caution on Exchange Ownership Caps

According to the official briefing transcript, Lee Eok-won highlighted critical flaws in the proposed 15% cap. He stated, "The exchange market is nearly a monopoly." Lee noted that latecomers hold under 3% combined market share. Forcing companies with less than 1% share to diversify major shareholders could deter investment. He emphasized theoretical and practical issues, including treatment of new entrants with zero market share. Lee called for reviewing various opinions before implementation.

Regarding a separate policy to recognize consortiums with bank stakes exceeding 50% plus one share as stablecoin issuers, Lee clarified it does not favor specific sectors. This move aligns with global trends toward regulated stablecoin frameworks, as seen in the SEC's recent guidance on digital assets. The FSC's cautious approach reflects a balance between market control and innovation.

Market Context & Historical Precedent

Historically, South Korea has been a crypto market, with exchanges like Upbit and Bithumb driving retail adoption. In contrast, the proposed cap mirrors past regulatory attempts in Japan and the U.S. to limit exchange concentration. Underlying this trend is a global push for decentralization, but overly restrictive rules often stifle growth. For instance, China's 2021 crackdown led to capital flight, while the EU's MiCA framework fostered innovation through tiered compliance.

Consequently, Lee's tiered proposal could prevent liquidity fragmentation. Market analysts note that extreme market concentration, as highlighted by Lee, creates systemic risks. A uniform cap might exacerbate these risks by reducing competitive incentives. This regulatory hesitation occurs amid broader market stress, with Bitcoin showing a 7.31% decline and the Crypto Fear & Greed Index at 12/100 (Extreme Fear).

Related Developments

• Binance's 39.2% CEX dominance contrasts with Upbit's 10th rank, highlighting global monopoly concerns.
• Bitcoin ETFs see $545M outflows as extreme fear grips markets, amplifying regulatory sensitivity.
• Bitcoin futures show bearish skew, with long/short ratios signaling extreme fear amid policy shifts.

Technical Architecture & Price Action

Market structure suggests regulatory uncertainty is driving price volatility. Bitcoin currently trades at $71,043, down 7.31% in 24 hours. Technical analysis indicates a critical support zone at the $70,000 psychological level, coinciding with the 50-day moving average. A break below this forms a bearish order block, potentially targeting $68,000 (Fibonacci 0.618 retracement from recent highs).

, on-chain data shows reduced exchange inflows, suggesting hodler accumulation despite fear. The UTXO age bands reveal increased long-term holding, a bullish divergence from short-term sentiment. RSI sits at 42, indicating neutral momentum with bearish bias. This technical setup mirrors past regulatory events where price recovered after initial sell-offs, as seen during the 2023 SEC lawsuits.

By The Numbers

Why It Matters

This regulatory debate impacts institutional liquidity cycles and retail market structure. A tiered cap could foster innovation by allowing smaller exchanges to attract capital, while a uniform cap might consolidate power among incumbents. Evidence from South Korea's previous regulations shows that flexible rules reduce market shocks. For instance, the 2017 ban on anonymous trading initially crashed prices but later stabilized markets through compliant exchanges.

Institutional players monitor such policies for portfolio allocation shifts. Stricter caps may divert capital to jurisdictions with favorable rules, affecting global liquidity flows. Retail traders face increased volatility during policy uncertainty, as seen in today's Bitcoin decline. The FSC's stance sets a precedent for other Asian markets, influencing regional adoption trends.

Expert Commentary

"Lee's caution reflects a nuanced understanding of market dynamics. A one-size-fits-all cap ignores the liquidity needs of emerging exchanges. Historical cycles suggest that balanced regulation, like tiered approaches, supports long-term growth without stifling competition." — CoinMarketBuzz Intelligence Desk

Market Outlook & Price Scenarios

Based on current market structure, two scenarios emerge. First, if the FSC adopts a tiered cap, Bitcoin could rebound to $75,000 as regulatory clarity reduces fear. Second, a uniform cap might extend the sell-off toward $68,000. Technical levels provide clear invalidation points.

• Bullish Invalidation Level: $75,000. A break above this resistance confirms trend reversal, driven by positive regulatory outcomes.
• Bearish Invalidation Level: $68,000. A break below this support invalidates the current structure, indicating prolonged bearish sentiment.

The 12-month institutional outlook hinges on final policy details. A tiered cap could attract $2-3 billion in new exchange investments, boosting market depth. Conversely, a uniform cap may trigger capital outflows, similar to post-ETF approval volatility. Over a 5-year horizon, South Korea's approach will influence global regulatory frameworks, potentially standardizing tiered ownership models.