The Korea Fintech Industry Association (핀산협) urged financial authorities to reconsider a proposed ownership dispersion regime for digital asset exchanges, saying it could weaken industry innovation and global competitiveness.

In an appeal issued on Monday, the association said the introduction of ownership dispersion rules limiting a digital asset exchange’s largest shareholder stake to 15 to 20 percent could damage the growth foundation of South Korea’s digital asset industry.

It called the biggest problem the potential weakening of decision-making speed and accountability across the industry if regulations are introduced to administratively disperse the ownership structures of private companies. It also raised the possibility of legal disputes, including infringement of property rights, violation of the principle prohibiting retroactive legislation, and fairness issues compared with overseas cases.

It said there is little policy need to pre-emptively apply ownership dispersion rules only to the digital asset industry.

The association said digital asset exchanges have strong potential to grow beyond simple trading platforms into next-generation financial infrastructure that can serve as financial gateways linking global digital assets with the real economy. It also said rigid governance structures have been a major factor behind the slow digital transformation and overseas expansion of the existing financial sector, adding that ownership dispersion rules could instead burden innovation industries overall.

As alternatives, it called for market-friendly governance improvements, including strengthening market monitoring by encouraging initial public offerings, introducing accountability structure frameworks, imposing ESG obligations, and bolstering the independence of procedures to appoint outside directors.

The association stressed that policy directions should be set to balance user protection and industry innovation through gathering opinions from various stakeholders, including industry, academia and the legal community.