Legislative Research Service Warns of Conflicting Shareholding Rules for Crypto Exchanges Under Parent Companies

A legislative research service has warned that implementing restrictions on major shareholders of virtual asset (cryptocurrency) exchanges could lead to conflicting requirements with current parent company ownership rules under the Fair Trade Act.

According to a report submitted by the National Assembly Legislative Research Service to Rep. Park Min-gyu's office, if a holding company were to incorporate a cryptocurrency exchange as a subsidiary, it might face difficulties meeting both different shareholding standards simultaneously.

The current Fair Trade Act requires holding companies to own more than 50% of unlisted subsidiaries, while listed subsidiaries require over 30%, and venture holding company subsidiaries must hold at least 20%. Meanwhile, discussions on the Digital Asset Basic Law propose limiting major shareholders of cryptocurrency exchanges to 20% or below, with exceptions allowing up to 34% under certain conditions.

However, the Legislative Research Service noted that while the regulations appear formally conflicting, they serve different purposes and apply to different contexts, making it difficult to conclude that conflicts would occur in all cases. The Fair Trade Commission has taken a similar stance, stating that shareholding rules under the Fair Trade Act aim to ensure responsible governance within holding company structures, whereas exchange ownership limits seek to promote market fairness through diversified ownership.

The report also cited the merger of Naver Financial and D'Namu as an example. While Naver Financial currently does not qualify as a holding company, the Legislative Research Service warned that if its corporate structure changes in the future to meet holding company criteria, conflicts between exchange shareholding limits and parent company regulations could become a practical issue.

The service recommended that future legislation should consider user protection, market fairness, industry competitiveness, investment incentives, governance structures, and compatibility with existing regulations when designing regulatory frameworks.