Naver-Dunamu Merger Hurdle Eases After South Korea Adds Exception to Crypto Shareholder Review

South Korea has added an exception to the major-shareholder eligibility review for crypto firms, removing one of the obstacles to a merger between Naver Corp. and Dunamu. The change eases much of the uncertainty over whether Naver's past Fair Trade Act violation would affect the review of Dunamu's major shareholder.

The Financial Services Commission said on August 11 that the cabinet approved revisions to the enforcement decree of the Act on Reporting and Using Specified Financial Transaction Information, also known as the Special Financial Transactions Act. Under the changes, a major shareholder of a virtual-asset service provider may be exempt from disqualification even if it received criminal punishment for violating laws including the Fair Trade Act, if the penalty resulted from a joint penal provision or if the Korea Financial Intelligence Unit determines the violation was minor. The revision reflects an earlier recommendation from the Regulatory Reform Committee.

The amendment had emerged as a key variable in the proposed Naver-Dunamu merger. Naver was fined in a first-instance court ruling for violating the Fair Trade Act in connection with its real estate platform business. Because Naver is the controlling shareholder of Naver Financial, which would become a major shareholder of Dunamu, the issue had raised concerns over the eligibility review after the revised rule takes effect.

The original draft of the enforcement decree did not include an exception based on the severity of a legal violation, but the clause was added during the regulatory review process. That makes it less likely that Dunamu's virtual-asset service provider registration would be rejected solely because of Naver's Fair Trade Act violation. The FIU will decide whether the exception applies in practice. The rule will take effect on August 20.

The revision also tightens regulation of virtual-asset transfer transactions. The travel rule, which requires the provision of sender and recipient information when virtual assets are transferred, will be expanded to all transactions. Transactions involving overseas exchanges and private wallets will be restricted according to risk, and transfers of 10 million won ($7,200) or more will be subject to a separate suspicious-transaction monitoring system.

Cho Mi-hyun, Hankyung.com reporter, mwise@hankyung.com