Naver-Dunamu Deal Hurdle May Ease After Panel Urges Exception to Crypto Rule

A presidential regulatory reform committee has recommended that South Korea’s Financial Services Commission add an exception clause to its proposed revision of the enforcement decree of the Act on Reporting and Use of Specific Financial Transaction Information, Chosun Ilbo reported. The move could ease one of the regulatory hurdles surrounding Naver’s proposed acquisition of Dunamu.

According to the newspaper’s July 24 report, the Growth Subcommittee of the Regulatory Reform Committee reviewed the FSC’s proposed decree revision and recommended adding exceptions to the screening criteria for major shareholders of virtual asset service providers, or VASPs.

The final version of the revision will be set after deliberation by the FSC, a review by the Ministry of Government Legislation, and meetings of vice ministers and the cabinet.

In the draft revision the FSC announced for public comment in March, past violations of economic laws including the Fair Trade Act, the Punishment of Tax Offenses Act and the Act on the Aggravated Punishment of Specific Economic Crimes were added as grounds for rejecting a VASP filing. That would allow authorities to reject a filing to change a crypto operator’s major shareholder if the shareholder had a record of violating those laws.

The dispute centered on the lack of an exception clause. The original draft did not include provisions to separately consider cases in which a violation was minor or only the corporation was punished under joint penal provisions. The committee reportedly concluded that uniformly rejecting filings without weighing the seriousness of a violation could be excessive relative to the purpose of the regulation, and recommended creating an exception.

The recommendation could also affect Naver’s acquisition of Dunamu. Naver was fined 200 million won, or about $145,000, in a first-trial ruling last year over alleged Fair Trade Act violations tied to its real-estate information service, and the appeal is ongoing. If the decree revision takes effect in its original form, that record could become a factor in the VASP major shareholder eligibility review tied to the Dunamu deal.

Still, other procedural variables remain for the transaction. The Korea Fair Trade Commission is conducting a merger review, and Naver has postponed the deal’s closing date to Dec. 31 from June 30.

Another variable is the Digital Asset Basic Act being pursued by the government. The bill includes discussions on limiting the ownership stakes of major shareholders in virtual asset exchanges, which could affect the structure of the acquisition depending on how the rules are designed.