Dunamu and Naver Financial Merger Announcement
Dunamu, the entity behind South Korea’s leading cryptocurrency exchange Upbit, has announced a significant merger with Naver Financial, a prominent player in the payment processing sector. This strategic partnership is poised to create a powerhouse valued at approximately $13.8 billion (or 20 trillion won).
Details of the Merger
According to reports from Maeil Business Newspaper, both firms will convene for board meetings on Wednesday to finalize details regarding a stock swap merger, with further information to be unveiled during a joint event at Naver’s headquarters in Seongnam on Thursday.
Financial analysts speculate that this merger could propel the new company towards a listing on the Nasdaq, potentially boosting its valuation to $34.5 billion (approximately 50 trillion won), contingent on drawing global investment interest in its blockchain technology and stablecoin initiatives, as noted in the Seoul Economic Daily.
Strategic Alignment and Shareholder Impact
This merger strategically aligns the top cryptocurrency exchange in South Korea with the country’s leading online payment provider, especially as the South Korean government gears up to introduce new regulations concerning digital assets and the management of stablecoins.
Recent reports suggest that under the terms of the merger, Dunamu’s shareholders will exchange their shares for Naver Financial shares at a ratio of approximately 1:3.3 to 1:3.4, effectively making Dunamu a wholly owned subsidiary of Naver. Following this arrangement, Dunamu’s chairman, Song Chi-hyung, and vice chair, Kim Hyung-nyeon, are anticipated to become the largest stakeholders in the new company, collectively holding nearly 30% of it. Conversely, Naver’s ownership stake will shrink from 69% to roughly 17%; to comply with anti-monopoly regulations, Dunamu is expected to grant Naver more than half of its voting rights.
Future Plans and Market Sentiment
On Thursday, executives from both companies will elaborate on how Naver Pay plans to integrate with Dunamu’s blockchain and cryptocurrency systems. Peter Chung, lead researcher at Presto Research, highlighted that the merger is motivated by the aspirations of both firms to launch stablecoins, a move that has caught the attention of major tech corporations in Asia. Dunamu previously disclosed plans for a won-backed stablecoin, with Naver Pay earmarked as the primary issuer. They are also working on GIWA, a bespoke Ethereum layer-2 blockchain tailored for stablecoins and payment transactions.
Chung further articulated that the merger could serve as a pathway for both firms to broaden the adoption of stablecoins beyond mere speculative trading. He emphasized that combining their competencies can advance their mutual objectives. Despite optimism, other market indicators suggest skepticism; participants on the prediction platform Myriad estimate only a 12.3% probability that stablecoins will exceed a $360 billion valuation by February.
Regulatory Approval and Challenges
The partnership awaits approval from financial regulators and the Fair Trade Commission, who will assess issues related to risks, compliance, and market competition. Chung pointed out that potential risks exist, yet there is a prevailing sentiment among regulators to enhance access in the stablecoin landscape, particularly with four additional licensed crypto exchanges in operation, primed for market entry.
Recent Regulatory Issues
This announcement follows Dunamu facing a substantial fine of $24.3 million (35.2 billion won), related to lapses in customer identification procedures affecting 5.3 million cases. Additional regulatory actions against other South Korean exchanges are anticipated in the imminent future, according to local media reports.
