On July 9, South Korea’s Fair Trade Commission (KFTC) approved Mirae Asset Consulting’s acquisition of 92.06% of cryptocurrency exchange Korbit. This is the first time that a subsidiary of a large Korean financial institution has been allowed to purchase a licensed digital asset exchange.
For the rest of the world, which is watching with interest how traditional finance is moving towards cryptocurrency, this ruling represents a real test of acceptance for this merger.
Regulators in the United States, Europe and Asia have spent years considering how banks and asset management companies will be able to operate exchanges. South Korea has shown one approach to benefit and has not had to break the barriers between finance and cryptocurrencies.
Mirae Asset Consulting is paying 133.4 billion won for the acquisition (equivalent to $97.9 million based on Bank of Korea exchange rates on July 9). The company purchased 26.9 million shares of Corbett stock, as stated in Regulatory filing.
Why did the organizer say yes?
The FTC based its case for approval on the fact that Korbit is a minor player in the market. The commission stated that Korbit is the fourth in the country out of five licensed exchanges operating using currency trading technology with the won. The platform witnessed that trading volume during the year amounted to only 0.5%. It is also known that Upbit accounts for 69% of trading volume; Bithumb’s percentage is about 28%; Coinone has about 2%; And Gopax is close to 0.1%, As reported by Bloomingbyte.
Thus, the Authority ruled that the deal would not cause harmful effects on the market. The committee explained that it considered two risks: whether it is possible to create a platform for stocks and cryptocurrencies that would make it difficult for competitors to access the stock market and whether it is realistic to create a cryptocurrency exchange-traded fund that would push competitors into asset management. The regulator concluded that these risks could only occur if Korbit had significantly greater liquidity.
“For concerns such as the exclusion of competing companies in securities markets and asset management to actually materialize, Corbett must have sufficient liquidity,” a commission official said. According to ChosonbisHe added, “At the current level, it is not enough to cause anti-competitive effects.”
A workaround, not a rewrite
In Korea there Systems Which prevents banks, insurance companies and regulated securities companies from participating in cryptocurrency transactions, which is the approach that Mirae Asset applied in executing this transaction.
The buyer is a company called Mirae Asset Consulting, an organization that is not in the financial sector and generates its revenues from hotel operations, not from any of the various investment securities or other financial activities undertaken by the group.
Structure is important for anyone who views the deal as a precedent. Mirae Asset was unable to obtain approval from its financial subsidiary to own the exchange, but it employed a non-financial firm to hold the asset to ensure that the separation principle was maintained, a distinction highlighted by the KFTC when it described the precedent as the first case of a financial entity subsidiary acquiring a digital asset exchange.
according to Report from Ledger InsightsThe sellers are NXC, the holding company for toy maker Nexon, and SK Square. Meanwhile, Bitstamp, owned by Robinhood, appears to retain the other 8% stake in Korbit. This stake is in line with Mirae Asset Group’s goal of building digital asset and wallet infrastructure outside of Korea.
Which indicates the broader market
The purchases are included within a strategy described by Mirae Asset as “Amazing Origins 3.0“, a plan announced by its securities arm this year to integrate digital assets into a traditional financial business. Ownership of the exchange infrastructure gives the company a licensed base to explore the world of tokenized securities and crypto ETFs.
The FTC identified the outcome as an incentive, not a threat, to the industry. “We hope that competition in the digital assets market will be revitalized by reshaping the digital finance market and innovating services,” she said. According to the Digital Today website.
Only time will tell whether the market reshaping will remain confined to Korea. The merger process has already begun with Coinone currently looking for a buyer. According to a CoinMarketCap report. A licensed exchange now located within one of South Korea’s largest banking conglomerates serves as a new benchmark for international financial institutions that are still considering how to invest in cryptocurrencies through legal means.
