[DigitalToday reporter Sangyeop Oh] Mirae Asset Group’s acquisition of Korbit has cleared the hurdle at the Fair Trade Commission. But the combination of Naver Financial and Dunamu has been delayed again. In M&A involving digital asset exchanges, differences in review intensity are becoming clearer depending on market dominance and licensing burdens.

The FTC said on Wednesday it approved a business combination in which Mirae Asset Consulting will acquire a 92.06 percent stake in Korbit for about 133.4 billion won.

Mirae Asset Consulting is a non-financial affiliate of Mirae Asset Group whose main business includes hotel operations. The structure brings a digital asset exchange into a group that has financial affiliates such as Mirae Asset Securities and Mirae Asset Management.

The key to the FTC’s decision was Korbit’s low market share. Korbit is one of five domestic digital asset exchanges that allow won trading, but its market share based on trading volume last year stayed at about 0.5 percent.

The FTC viewed Korbit as unlikely to be able to exclude competitors in the securities or asset management markets in a short period in a market structure where liquidity is concentrated around Upbit and Bithumb.

The FTC viewed the deal as a conglomerate merger between the securities business and a digital asset exchange, and between the asset management business and a digital asset exchange. It also reviewed the possibility that stock investment platforms and digital asset exchanges could be linked, or that digital asset-based exchange-traded fund products could be pursued.

It concluded that the deal would not have a large anti-competitive effect because Korbit has limited liquidity and a limited user base.

The Naver Financial and Dunamu case is different. Naver Financial’s move to fold Dunamu in as a wholly owned subsidiary is not a simple stake purchase but a comprehensive share-swap.

Naver said in a filing on July 6 that it adjusted the share-swap date to Dec. 31 from Sept. 30, and the planned shareholders’ meeting date to Nov. 19 from Aug. 18. The schedule was pushed back again after it was delayed once in March.

The biggest difference is Upbit’s market dominance. Upbit, operated by Dunamu, is the No. 1 operator in South Korea’s digital asset trading market. If combined with Naver Financial’s payment and financial platform and Naver’s user base, influence could expand across not only digital asset trading but also payments, commerce and financial services.

Licensing approvals from financial authorities are also a burden. To complete the Naver Financial and Dunamu transaction, procedures are needed including FTC approval of the business combination, approval of a change in Naver Financial’s major shareholder and a filing for concurrent business, and acceptance of a filing for a change in Dunamu’s major shareholder.

As the deal combines a fintech platform with the country’s largest digital asset exchange, reviews could cover not only market dominance but also user protection, internal controls and anti-money laundering systems.

Discussion of limits on major shareholders’ stakes is another variable. Under the current confirmed legal framework, there is no provision that directly limits the stake of a major shareholder in a digital asset exchange. In talks on the second stage of digital asset legislation, a proposal has been discussed to view exchanges as financial market infrastructure and limit the stakeholding of major shareholders and related parties to about 15 to 20 percent. The structure references a 15 percent stake limit for alternative trading systems under the Capital Markets Act.

If this proposal is reflected in legislation, it could become a significant burden for exchange M&A. Mirae Asset Consulting’s stake in Korbit is 92.06 percent, and Naver Financial is also structured to make Dunamu a wholly owned subsidiary. If stake-limit regulation is introduced, future governance restructuring could become unavoidable.

But there remains a possibility the plan could be adjusted in the legislative process because a method that forces existing operators to sell stakes retroactively raises controversy over infringement of property rights.

Revisions to the Act on Reporting and Using Specified Financial Transaction Information are also intertwined. The revised law, which takes effect on Aug. 20, allows authorities to examine a major shareholder’s criminal record, sound financial condition and social credibility when reviewing filings by digital asset businesses.

The scope of review also expands from focusing on chief executives and executives to include major shareholders. If an exchange’s governance structure changes, it would mean that, rather than a simple stake transaction, major shareholder eligibility and internal control systems must be verified together.

Mirae Asset also needs matters related to filings with the Financial Intelligence Unit, maintenance of bank real-name verified deposit and withdrawal accounts, advancement of AML systems, and improvements to user protection devices. Collaboration between Mirae Asset Securities and Mirae Asset Management and Korbit must also be designed to avoid conflicts of interest and investor protection issues.

An official in the digital asset industry said, "Approval of Mirae Asset’s Korbit acquisition is meaningful as the first case of a financial group acquiring an exchange, but it should also be viewed together with Korbit’s low market share." The official said, "For transactions like Naver and Dunamu where market dominance, major shareholder eligibility and discussions on stake limits are all involved at the same time, review inevitably takes longer."