5 Legal Hurdles Stand in Path of Crypto Exchange Operator Dunamu’s Naver Merger – Report
Dunamu, the operator of the South Korean crypto exchange Upbit, must overcome 5 authorized hurdles whether it is to finish its much-vaunted merger with the tech giant Naver, in accordance with a brand new report.
Naver is the nation’s greatest and most outstanding web agency, South Korea’s reply to Google. Upbit, in the meantime, has (*5*).
A Dunamu-Naver merger might create a crypto-tech behemoth on a scale beforehand unseen in the East Asian market.
However, the South Korean newspaper Hanguk Kyungjae recognized a number of points that stand in the way in which of the alliance, regardless of the merger discuss leaving the tech and crypto sectors “abuzz.”
It referred to as these authorized hurdles “important,” and added that “coverage uncertainties” might additionally undermine the bid.
Hurdle 1: Tradfi Regulations
In late 2017, South Korean regulators imposed a rule successfully barring conventional monetary corporations from doing crypto-related enterprise.
Although they by no means enshrined this in nationwide regulation, monetary trade tips nonetheless exclude the chance of banks and different lenders offering crypto-related companies.
Naver needs to merge its Naver Financial unit with Dunamu. The former is assessed as an digital monetary service supplier underneath the phrases of the Electronic Financial Transactions Act.
Regulators would, in principle, want to switch their tips for the merger to go forward as at the moment proposed.
Hurdle 2: Stablecoin Legislation Uncertainty
Domestic market observers assume that one of the important thing objectives of a Naver-Dunamu merger facilities on the issuance of won-denominated stablecoins and the enlargement of the cost ecosystem.
If Naver’s current Naver Pay platform might make use of a KRW-pegged coin, the agency might increase its presence in the funds market.
However, politicians and regulators remain divided on several key stablecoin-related matters, regardless of President Lee Jae-myung’s intention to legalize KRW-pegged tokens.
The central Bank of Korea (BOK) has taken a cautious stance, insisting that solely industrial banks or consortia the place banks are majority stakeholders needs to be allowed to challenge stablecoins.
But some politicians need to permit fintech companies and different IT gamers to challenge their very own tokens.
Should the BOK get its approach, this might show a setback. The newspaper wrote:
“A bank-centric construction would seemingly power the Naver-Dunamu alliance to take part solely as a technological and operational associate in a bank-led consortium, fairly than straight as an issuer.”
Hurdle 3: A Conflict of Interests?
If the Naver-Dunamu alliance points a KRW-pegged stablecoin, the brand new agency might battle to record this token on Upbit.
The phrases of the Virtual Assets Act explicitly prohibit exchanges from itemizing or buying and selling cash that they or their associates have issued.
If this proves to be a significant drawback, the brand new firm might discover workarounds, reminiscent of itemizing on different home and worldwide exchanges. But such a step would “considerably diminish” the influence of the merger, the newspaper added.
Hurdle 4: Stock Market Setbacks?
A merger might see Naver restructure Naver Financial and look to record it on the NASDAQ change alongside Dunamu.
The newspaper defined that each corporations have “actively included abroad listings and cut up itemizing eventualities into their mid- to long-term methods.”
But current revisions to the Commercial Act and the Capital Markets Act have bolstered minority shareholder safety.
The amended acts stipulate that in company restructuring processes, together with mergers, spin-offs, and IPOs, minority shareholders should obtain “truthful worth” gives for his or her holdings.
Experts imagine that class motion or shareholder spinoff fits might observe if current minority shareholders should not provided a suitably advantageous monetary package deal.
Hurdle 5: Governance construction questions
Speculation is rife that Naver’s Global Investment Officer and Chairman Lee Hae-jin has earmarked Dunamu’s Chairman Song Chi-hyung as his successor.
This has led to additional hypothesis that Song might finally turn into Naver’s largest single shareholder.
Song at the moment holds over 1 / 4 of Dunamu’s shares. The newspaper defined:
“Dunamu, which generates roughly 1 trillion gained [$702.2 million] per 12 months in internet earnings, is unlikely to conform to a merger deal with out a ‘carrot’ like securing administration proper or changing into the biggest particular person shareholder.”
However, market rules would stipulate that numerous compliance-related issues should first be happy.
This might show removed from easy. The switch of administration rights to Chi or putting in him as the biggest particular person shareholder is “unlikely to be achieved via a easy inventory transaction,” the newspaper concluded.
Only time will inform if Naver and Dunamu have what it takes to beat these obstacles and pull off what would undoubtedly turn into East Asia’s greatest IT-sector merger in current years.
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