[Alpha Biz= Kim Jisun] The National Assembly Research Service (NARS) has warned that a proposal by the government and ruling party to limit the shareholding of major shareholders in cryptocurrency exchanges may raise constitutional concerns.

In a written response released on March 4 to an inquiry by Rep. Kim Sang-hoon of the ruling People Power Party, the parliamentary research body said the proposed cap on major shareholders’ stakes in crypto exchanges could potentially violate constitutional protections related to property rights, freedom of occupation and business activities, and the prohibition of retroactive legislation.

According to the analysis, the measure may raise issues under Article 23 of the Constitution, which guarantees property rights, Article 15, which protects the freedom of occupation and business activity, and Article 13, which addresses retroactive legislation.

Regarding property rights, NARS said further review is needed to determine whether there is sufficient evidence to support the causal relationship between dispersing ownership stakes and improving transparency in cryptocurrency exchanges.

On the issue of freedom to conduct business, the report noted that if the shareholding cap effectively leads to the loss of management control, the level of infringement could be considered significant.

The research body also raised strong concerns about retroactive legislation. It stressed that regulations requiring major shareholders of crypto exchanges to dispose of stakes that were lawfully acquired in the past could be deemed unconstitutional unless there are exceptional circumstances justified by a compelling public interest.

The report also pointed out that similar regulations are difficult to find in major overseas jurisdictions. According to NARS, regulatory frameworks governing crypto exchanges in the European Union, Hong Kong and Singapore do not include provisions that limit the shareholding ratio of major shareholders, raising concerns about global regulatory alignment.

However, South Korea’s Capital Markets Act does include a provision limiting the shareholding of major shareholders in alternative trading systems (ATS). NARS explained that the regulatory context differs, as ATS operators are subject to ownership restrictions from the outset of their establishment, whereas cryptocurrency exchanges are already operating businesses that would be required to restructure their ownership after the fact.

The report added that a more detailed policy design would be necessary, taking into account differences in functional roles with securities exchanges, market structure, risk characteristics and the broader regulatory environment.

Rep. Kim Sang-hoon said that while the prompt introduction of a second-stage regulatory framework for virtual assets is clearly needed to enhance investor protection, provisions with potential constitutional issues—such as limits on major shareholders’ stakes—could undermine confidence in the rule of law if legislated without sufficient review.

 

 

 

[ⓒ 알파경제. 무단전재-재배포 금지]