Cha & Kwon Law Offices advised an overseas business operator seeking to operate a P2P virtual asset trading platform by providing a legal opinion on whether the platform’s operating structure would be subject to the virtual asset service provider reporting requirements under the Act on Reporting and Using Specified Financial Transaction Information.

The platform was designed based on a non-custodial P2P trading structure under which users directly control their own assets. However, the key issue was whether the platform could, in substance, be deemed to involve custody or management of virtual assets, or brokerage, intermediation, or agency services for the purchase, sale, or exchange of virtual assets, depending on the operator’s level of involvement in trading wallets, private key management, trade execution, settlement, and withdrawal procedures.

Cha & Kwon Law Offices comprehensively analyzed the likelihood of the operator being classified as a virtual asset service provider, focusing on the platform’s actual operating structure and the degree of control exercised over user assets. We also reviewed factors relevant to determining whether the business activities were directed at Korea, including the provision of Korean-language services and whether the platform engaged in business operations or marketing targeting Korean users, in order to assess the possibility of extraterritorial application of the Specified Financial Information Act.

As a result, Cha & Kwon Law Offices advised that, depending on the degree of the operator’s involvement in asset management and transactions, the platform could be evaluated as having a structure similar to a custodial exchange rather than a non-custodial platform. We further advised that, if the platform is deemed to conduct business targeting Korean users, reporting obligations under the Specified Financial Information Act may become an issue. In addition, we proposed practical measures to minimize regulatory risk by reviewing the platform’s operating structure and user asset management methods.

Cha & Kwon Law Offices provides practical legal advisory services for virtual asset trading platforms by assessing regulatory applicability based on the actual operating structure rather than the name or form of the business model, and by proposing suitable operating structures and regulatory response strategies tailored to each business model.