The growth subcommittee of the Presidential Regulatory Reform Committee on Thursday reviewed a draft revision to the enforcement decree of the Act on Reporting and Using Specified Financial Transaction Information and recommended that the Financial Services Commission add an exception to fit-and-proper screening standards for major shareholders of virtual asset service providers. The recommendation is expected to ease the regulatory burden over major shareholder eligibility raised during Naver's acquisition of Dunamu.

The Regulatory Reform Committee held its eighth growth subcommittee meeting at the Government Complex Seoul, chaired by subcommittee head Namgung Beom. It reviewed the FSC's proposed revisions to the enforcement decree and supervisory rules under the specified financial transaction information law. It heard opinions from related bodies and industry experts, including the Korea Fintech Industry Association and DAXA (Digital Asset Exchange Association), and took statements from the Korea Financial Intelligence Unit (FIU), the report said. Taking fairness into account, it agreed revisions were needed. The committee recommended supplementing the proposal to a level comparable to the Capital Markets Act.

The controversy arose after the amended law, revised in February, included records of violations of economy-related laws as grounds for rejecting reports on major shareholder changes for virtual asset service providers. Those laws include the Fair Trade Act, the Punishment of Tax Offenses Act and the Act on the Aggravated Punishment of Specific Economic Crimes. The FSC gave legislative notice of an enforcement decree revision with those provisions in March. The amended law is scheduled to take effect on Aug. 20. Critics said the proposal amounted to excessive regulation because it lacked exceptions reflecting the severity of violations.

The industry has raised concerns about fairness, saying existing financial laws include provisions that treat corporate fine-only penalties as exceptions to disqualification grounds for major shareholders, while the proposal under the specified financial transaction information law does not include such exceptions.

The proposal drew attention because it could directly affect Naver's acquisition of Dunamu. Naver was fined 200 million won in a first trial for allegedly abusing a dominant position while operating a real estate information service to obstruct Kakao's entry into the market, in violation of the Fair Trade Act, and an appeal is under way. Industry has raised concerns that if the proposal takes effect as drafted without exceptions, the fine record could serve as grounds to reject approval of Dunamu's report on a change in major shareholders, potentially disrupting the acquisition process.

Naver is pursuing integration by bringing Dunamu under Naver Financial, its wholly owned unit, as a wholly owned subsidiary. A shareholders meeting for a comprehensive share swap is scheduled for Nov. 19. The deal closing date was originally June 30, but has been delayed twice to Dec. 31 as the Fair Trade Commission's review of the business combination has been delayed.

With the committee's recommendation, Naver is expected to ease some of its burden related to major shareholder eligibility and continue preparations for Dunamu's integration with a target of December. Details of the revision are expected to be finalised after deliberations by the FSC and review by the Ministry of Government Legislation, followed by vice ministers' meetings and a cabinet meeting.

Other variables remain around the integration. The Fair Trade Commission's review of the business combination has not been completed, and legislation of the Digital Asset Basic Act, which would limit major shareholder stakes in virtual asset exchanges to 15 to 20 percent, could also affect the integration structure. If the stake cap is introduced, Naver Financial may need to review the current deal structure that would make Dunamu a wholly owned subsidiary.