With the revised Act on Reporting and Using Specified Financial Transaction Information set to take effect on the 20th, changes are expected in the reshaping of governance in the digital asset industry. Uncertainty surrounding a combination between Naver Financial and Dunamu has eased somewhat as exceptions are 마련ed for minor legal violations by major shareholders, but the burden on small and mid-sized operators is expected to grow as reviews of financial soundness and internal controls are tightened.

On the 13th, the Financial Intelligence Unit (FIU) and the Financial Supervisory Service held a briefing on a revised reporting manual for digital asset operators and prospective operators. The aim is to specify strengthened screening standards for reporting reviews, including the fitness of major shareholders, in line with the amended law promulgated on Feb. 19 taking effect from the 20th.

The core of the amended law is that the scope of reporting reviews for digital asset operators will expand from the operator itself to include major shareholders and governance structures.

The amended law defines the largest shareholder and major shareholders as major shareholders. Major shareholders include those who hold at least 10 percent of voting shares issued or who exercise de facto influence over major management matters through actions such as appointing and dismissing executives.

The enforcement decree also includes, in addition to the largest shareholder, shareholders who have appointed the chief executive officer or a majority of directors among those subject to review. It specified the scope so that, if the largest shareholder is a corporate entity, the control relationships of that entity can also be checked.

A major shareholder’s history of legal violations is also subject to review. In addition to the existing Foreign Exchange Transactions Act and financial-related laws, added relevant laws include the Monopoly Regulation and Fair Trade Act, the Act on the Aggravated Punishment of Specific Economic Crimes, the Act on Punishment of Tax Offenses and the Virtual Asset User Protection Act.

Still, exceptions were 마련ed for determining a major shareholder’s fitness. An enforcement decree for the Act that passed a Cabinet meeting on the 11th allows a major shareholder to be excluded from disqualification reasons even if they received criminal punishment for violating relevant laws, when the degree of violation is minor or the punishment was under provisions on vicarious liability.

This reflects in the final enforcement decree a recommendation made last month by the Regulatory Reform Committee to establish exception rules in consideration of fairness with other financial laws such as the Capital Markets Act.

As a result, some assessments say regulatory uncertainty surrounding the comprehensive share swap between Naver Financial and Dunamu has also declined somewhat.

Naver Financial and Dunamu are pursuing a deal that would make Dunamu a wholly owned subsidiary of Naver Financial through a comprehensive share swap. Naver was handed a first-instance fine sentence in September last year in a Fair Trade Act violation case related to the real estate listing information market, and an appeal trial is currently under way.

Concerns had been raised that, under the amended law, Naver’s past history of legal violations could become a variable in the review of Dunamu’s major shareholder fitness.

But as the enforcement decree provides a basis to allow exceptions when the degree of violation is minor or falls under vicarious liability provisions, the possibility that the deal would be immediately blocked solely due to the past Fair Trade Act violation record has fallen.

The industry sees the exception clause as likely to affect future acquisitions of digital asset operators and equity investments by financial companies and large corporations. That is because there were concerns that applying even minor violations of economic laws uniformly as disqualification reasons could excessively restrict entry into the digital asset market.

On the other hand, the regulatory threshold for existing digital asset operators is rising.

Financial authorities require digital asset operators to keep their debt ratio at 200 percent or below based on financial statements as of the end of the most recent quarter. User deposits held under the Virtual Asset User Protection Act are excluded from total liabilities. Operators must have no record over the past three years of undermining a sound credit order through defaults and must not fall under categories such as insolvent financial institutions.

In principle, corporate major shareholders are also subject to financial soundness standards such as a debt ratio of 200 percent or below as of the end of the most recent quarter. However, the revised reporting manual provides some exceptions, such as not applying the debt-ratio requirement when the major shareholder is a financial institution.

Requirements for organisation and internal controls are also strengthened. Operators must establish organisations for anti-money laundering and user protection and secure appropriate organisation and personnel, IT facilities and internal control systems, including appointing a reporting officer and a compliance officer who meet certain requirements.

The impact is also expected to differ between large corporations and financial companies and small and mid-sized operators. For large corporations and financial companies, uncertainty over market entry has eased somewhat as exceptions for minor violations were 마련ed in judging major shareholder fitness.

For small and mid-sized operators with relatively less capital, the burden could grow to meet financial soundness standards and requirements for organisation and personnel and internal controls.

In particular, the new reporting manual specified screening standards so reviews go beyond document checks to verify through on-site inspections whether organisations and systems are actually being operated. This is why analyses say the strengthened reporting regime could become a factor pressuring smaller operators to raise capital or restructure their businesses.

The industry also expects the overhaul to affect governance reshuffles at digital asset operators, including exchanges. That is because the structure both allows the possibility of large capital entering the market by providing exceptions to major shareholder disqualification reasons, while demanding even higher financial soundness and internal control capabilities from existing operators.

An industry official said, "Allowing the review of major shareholder fitness to assess the severity of legal violations reduces uncertainty for financial companies or large corporations in terms of entering the digital asset market." The official added, "Conversely, smaller operators may face greater burdens to raise capital or restructure their businesses going forward because they must meet strengthened financial soundness standards and organisation and personnel requirements."