A former Constitutional Court justice said that a clause under discussion by the ruling party and government for introduction in the second-phase virtual asset law (Digital Asset Basic Act) to restrict exchange controlling shareholders' equity "would likely be ruled unconstitutional by the Constitutional Court if a constitutional complaint is filed after the law passes."
On the 25th, former Constitutional Court Justice Lee Young-jin (Judicial Research and Training Institute class 22) said this at the seminar "Constitutional issues regarding restrictions on virtual asset exchange controlling shareholders' equity ratio," held at the FKI Conference Center in Yeouido, Seoul (formerly the Federation of Korean Industries building). This is the first time a jurist who served on the Constitutional Court has publicly offered an opinion on the controversy over the unconstitutionality of restricting controlling shareholders' equity.
After being appointed a judge in 1993, Lee was appointed to the Constitutional Court in 2018 under Moon Jae-in and served until 2024. Lee is currently a distinguished professor at the Sungkyunkwan University law school and a senior advisor at the law firm Seonun.
Lee said, "When a constitutional complaint is filed with the Constitutional Court, we generally look for similar cases abroad. But regulations like restricting an exchange's equity cannot be found anywhere overseas," adding, "In such cases, the likelihood of an unconstitutional ruling by the Constitutional Court is high."
Lee said, "To retroactively regulate an already-formed private company equity structure, the public interest must be substantial," adding, "It is very risky for the protection of fundamental rights to advance an abstract pretext that the regulation's public interest is large simply because exchanges have many users."
There was also criticism of the ruling party and government's direction of defining exchanges as public goods. Gye In-guk, a professor at the Korea University Graduate School of Public Administration, said, "Even if there are many users, a private company is a private company. Why does a company (like an exchange) suddenly become a public good?" adding, "Carrying a public nature and being a public good are completely different, both in economics and in law."
Questions were also raised about the "equity sale grace period," one of the clauses reportedly agreed upon by the ruling party and government to restrict controlling shareholders' equity. Hwang Sung-ki, a professor at the Hanyang University law school, said, "If a condition is created that equity must be sold by a certain time, the exchanges that must sell equity end up being the ones in a hurry. If the buyer drags out negotiations, the exchange has no choice but to accept a steep discount," adding, "This is a clear infringement of property rights in that it undermines a company's legitimate market value."