A Korean fintech startup (hereinafter referred to as the “Client”) planned to launch a blockchain-based investment platform targeting U.S. investors. The business model involved establishing private funds and collecting both management fees and separate platform usage fees. A key legal issue arose as to whether the platform usage fee—calculated in proportion to the fund’s capital commitments—would trigger a requirement to register as a Broker-Dealer under the U.S. Securities and Exchange Commission (SEC) regulations. Additionally, the Client required a detailed legal review to ensure regulatory compliance in connection with its management and performance fee structures as a fund manager.

Cha & Kwon Law Offices, in collaboration with a U.S. securities law expert, conducted a thorough analysis of the Client’s fee model. We advised that when platform fees are tied to the success of securities transactions, registration as a Broker-Dealer becomes mandatory. Accordingly, we recommended modifying the fee structure to a format with lower regulatory risk. Furthermore, we provided specific guidance on the legal conditions required for the Client to legitimately collect management and performance fees in its capacity as a General Partner, thereby enabling proactive management of potential regulatory exposure.

As a result of our advisory, the Client successfully adopted a legally sound fee model that minimized risk and allowed for a compliant U.S. market launch. The Client also implemented a robust contract structure aligned with U.S. Broker-Dealer regulations and investor protection principles, reducing the likelihood of future legal disputes.

If you require expert legal advisory services regarding U.S. securities laws, Broker-Dealer licensing, or the structure and operation of private funds, please contact Cha & Kwon Law Offices. Our team of specialists is ready to deliver tailored legal solutions.