Korea Institute of Finance Urges Broader Vetting of Crypto Exchange Major Shareholders

Reputation and Expertise Join the Checklist

A research fellow at the Korea Institute of Finance has called for South Korea to widen the suitability review of financial companies' major shareholders, a change that would cover the owners of domestic crypto exchanges. Lee Si-yeon lays out the case in a paper published on 2026-11-06, “The Need to Expand the Judgment of Major-Shareholder Suitability at Financial Companies and Its Implications.” Her core argument is that the vetting system should become more sophisticated as digital asset businesses grow, and that examiners should weigh a shareholder's reputation, professional expertise and managerial capability rather than stopping at legal disqualifications.

The recommendation lands inside an active legislative debate. One of the core issues in the Digital Asset Basic Act now before the National Assembly is a cap on the equity stakes that major shareholders of coin exchanges may hold, and as a government-affiliated research body the KIF is read as reflecting the administration's legislative intent.

Korea has already tightened the framework this year. A February 2026 amendment to the Specific Financial Information Act strengthened the grounds for reviewing virtual asset operators' major shareholders, and the revised law took effect in August. It created a definition of the major shareholder, required operators to file major-shareholder information at registration, extended screening of legal violation records from operators to major shareholders, and added requirements covering financial condition and social credit. The enforcement decree went further: a shareholder who appointed the chief executive or a majority of the board counts as a major shareholder; where the largest shareholder is a corporation, that corporation's own largest shareholder and its representative also fall under review; and non-financial domestic corporate shareholders must keep a debt ratio at 200% or below. Even so, the paper finds, domestic review remains centered on confirming disqualifying grounds such as violation records and financial health, leaving no comprehensive evaluation of a shareholder's morality, management expertise or the competence matching actual control.

MiCA Article 84 as the Benchmark

The paper benchmarks Korea against overseas regimes that already apply qualitative standards. Under Article 84 of the European Union's Markets in Crypto-Assets Regulation, a prospective acquirer of a major stake in a crypto-asset business is assessed on reputation and financial soundness, and the executives who will run the operation afterward are evaluated for their reputation as well as knowledge, skills and experience. The United Kingdom screens the suitability of beneficial owners or acquirers of control under its anti-money-laundering rules and the Financial Services and Markets Act. Both systems pair financial tests with an examination of the character and competence of shareholders and management, exactly the dimension the paper finds missing at home.

Lee frames the gap as a risk-management issue rather than a formality. Non-traditional financial actors such as digital asset operators can introduce new conflicts of interest and technology-driven risks, and if such a firm becomes a major shareholder of a bank or another established financial company, those risks could transmit into the wider financial system. Screening a shareholder's record and balance sheet and evaluating managerial capability are, in the paper's reading, distinct tasks that the current system conflates.

The report is also careful about the opposite risk. Widening qualitative criteria could make judgments opaque or hand supervisors excessive discretion, leaving operators unable to predict review outcomes. The paper therefore couples its proposal with procedural safeguards: concrete screening standards and guarantees of predictability for applicants.

One related thread sits outside the paper. The Financial Services Commission has previously said that proposed shareholding limits for crypto exchange major shareholders are not aimed at any specific company. That debate asks how large a stake one shareholder may hold; the KIF paper asks who qualifies to hold one at all, and the two questions touch the same ownership structure while examining different things.

Discretion Against Predictability

The direction of travel is clear: a government-affiliated research institute is supplying analytical groundwork for the qualification strand of the Digital Asset Basic Act while lawmakers argue over caps. For Korea's exchanges, the practical consequence is that ownership changes, board appointments and structures above the registered entity may all fall inside the review perimeter if the proposal is legislated. The binding constraint may not be the criteria themselves but the safeguards around them: without written standards for judging reputation and capability, the same qualitative review that would align Korea with MiCA Article 84 could expose every filing to unpredictable discretion.