Fair Trade Commission Says Virtual Asset Exchange Equity Limits Don't Conflict with Fair Trade Law

The Fair Trade Commission has stated that regulations limiting equity stakes in virtual asset (digital asset) exchanges do not conflict with the Fair Trade Act.

A report submitted by the National Assembly Legislative Research Institute to Rep. Park Min-gyu's office on May 15 revealed that the commission explained: 'The Fair Trade Act aims to ensure alignment between ownership and responsibility within holding company structures, whereas digital asset exchange equity limits are designed to enhance fairness through dispersed ownership due to industry characteristics. These represent different regulatory approaches for distinct policy objectives, making it difficult to view them as legally conflicting.'

The question arose because there is potential conflict if digital asset exchanges are integrated into holding company subsidiaries under the current Fair Trade Act and proposed digital asset exchange equity limits.

Proposed regulations on digital asset exchange equity limits, part of the Digital Asset Basic Law legislative process, include capping major shareholders' stakes at 20% with an exception allowing up to 34%. The issue emerges when exchanges are incorporated as subsidiaries of holding companies. The Fair Trade Act requires holding companies to maintain minimum ownership levels: over 50% for non-listed subsidiaries, over 30% for listed subsidiaries, and over 20% for venture holding company subsidiaries.

The Legislative Research Institute noted that if digital asset exchanges become holding company subsidiaries, there could be conflicting requirements between the Fair Trade Act's minimum ownership thresholds and the proposed equity limits. The commission suggested adjustments could include listing the exchange to meet both minimum (30%) and maximum (34%) shareholding requirements or utilizing venture holding company frameworks to apply a 20% minimum. Alternatively, maintaining the holding company structure while restructuring governance was also proposed.

The Legislative Research Institute further explained that the regulations differ in purpose, target scope, and conditions, making it difficult to consider them generally conflicting across all scenarios. It added that future legislation should comprehensively consider consumer protection, market fairness, industry competitiveness, investment incentives, and relationships with corporate governance rules when designing regulatory frameworks.