[Legal Advice] Review of Legal Matters Regarding Whether a Virtual Asset Business is Subject to the Act on the Protection of Financial Information

Law firm Veat conducted a legal review to determine whether Company A, a blockchain service company,’s request regarding the virtual asset low-cost trading route guidance service meets the requirements of a virtual asset business operator under the “Act on Reporting and Use of Specific Financial Transaction Information.”

Regarding the client’s service, while it claims to use a decentralized approach, it involves the management team mediating or facilitating the sale or exchange of virtual assets and receiving transaction fees, which could potentially qualify it as a virtual asset business operator under the definition clause of the “Act on Reporting and Use of Specific Financial Transaction Information.” We provided partial guidance regarding the outcome.

Furthermore, in order for the client to reduce regulatory risks from the Korean Financial Supervisory Service, the management team should only receive development costs instead of platform transaction fees, minimize the management team’s governance token equity ratio, and transfer decision-making authority to a DAO, and also transfer platform administrator keys and platform management authority to the DAO, considering the need to take decentralized measures. We provided the content reviewed.

In addition, it is also important to determine whether the virtual asset investment service is a virtual asset business operator reporting target, but it is difficult for the company to clearly understand whether it meets the guidelines provided by relevant institutions; therefore, we recommend consulting with experienced lawyers who have extensive experience in legal advice regarding various laws to ensure that it does not fall under the “Act on Reporting and Use of Specific Financial Transaction Information” and to avoid risks to the company’s growth.

Law firm Veat has experience providing legal advice to numerous virtual assets and blockchain service companies, and has expertise in virtual asset services, NFTs, Bitcoin, and blockchain businesses, and provides legal advice.

If you have questions regarding whether a virtual asset business operator applies to your company or if you need legal advice on NFTs, Bitcoin, or other cryptocurrencies, please contact Law firm Veat.

Thank you.

Law firm Veat.