South Korea’s National Assembly Research Service has warned that planned limits on large shareholders in virtual asset exchanges may need to be reconciled with the country’s existing holding company rules under the Fair Trade Act. The issue arises if a crypto exchange is operated as a subsidiary within a holding company structure.

In its review, the parliamentary body said the two frameworks could create competing ownership thresholds for the same company. It added, however, that a formal conflict would not necessarily occur in every case because the two systems were designed for different policy purposes.

Two sets of ownership thresholds

The concern centers on the proposed Digital Asset Basic Act, which in principle would cap a major shareholder’s stake in a crypto exchange at 20% or less. The draft would also allow holdings of up to 34% in certain cases.

That approach differs from the Fair Trade Act, which requires a holding company to keep at least 50% of an unlisted subsidiary, 30% of a listed subsidiary, and 20% of a subsidiary under a venture holding company structure. According to the research service, those requirements could be difficult to satisfy at the same time if a virtual asset exchange sits beneath a holding company.

Why the rules may not always collide

The report said the overlap should be examined carefully during lawmaking rather than treated as an automatic contradiction. In its view, the two regimes do not always point in the same direction, but they also do not necessarily apply in exactly the same way in every scenario.

The Fair Trade Commission expressed a similar position. It said the ownership rules in the Fair Trade Act are meant to secure responsible governance within a holding company system, while the planned cap on exchange shareholders is aimed at improving market fairness through more dispersed ownership.

Naver Financial and Dunamu cited as an example

The research service referred to the proposed business combination between Naver Financial and Dunamu as a case worth watching in this context. It noted that the Fair Trade Act’s holding company ownership rules do not currently apply immediately because Naver Financial is not classified as a holding company.

That said, the report pointed out that the analysis could change if the company’s governance structure changes in the future. In that event, the interaction between digital asset regulation and holding company law could become more than a theoretical issue.

What lawmakers are being asked to weigh

The report said legislators should fine-tune any future framework by considering a wider set of policy goals together. These include user protection, market fairness, industry competitiveness, investment incentives, corporate governance and how any new digital asset law fits with rules already in force.

The next confirmed step is legislative review. As the Digital Asset Basic Act proposal is examined, lawmakers will need to decide whether the draft ownership cap requires adjustment, clarification or an explicit accommodation for cases involving holding company structures.

Source: en.bloomingbit.io