Cha & Kwon Law Office advised a client seeking to operate a virtual asset trading platform and examined regulatory issues concerning whether the platform could be classified as a Virtual Asset Service Provider (VASP) under the Act on Reporting and Use of Certain Financial Transaction Information (the “Specified Financial Information Act”).

Although the platform was presented as a structure facilitating direct transactions between users, there were aspects of its actual operation that suggested the operator could be involved in users’ assets and the transaction process. In addition, while the platform was intended to be operated by a foreign entity, certain features raised questions as to whether it could be regarded as conducting business targeting users in Korea. Accordingly, the substance of the platform’s operational structure and the potential applicability of Korean regulations became key issues.

Cha & Kwon Law Office reviewed the platform’s legal characterization and potential regulatory obligations, focusing on factors such as whether the operator exercised substantial control over users’ virtual assets, whether the operator was involved in transaction execution or settlement processes, and whether a foreign operator could nonetheless be deemed to be providing services to Korean users.

The firm also provided recommendations on restructuring the platform’s operational framework to mitigate regulatory risks and advised that platform descriptions and promotional materials should accurately reflect the platform’s actual functions and operational mechanisms.

Through this engagement, Cha & Kwon Law Office demonstrated its practical approach to advising virtual asset trading platforms by assessing regulatory applicability based on the substance of actual operations and providing guidance on operational restructuring to address compliance risks.