FSC Issues No-Action Letter for Gas Fee Token Holdings Prior to VAUPA Enactment

Date: December 12, 2024

Issue: Whether a Virtual Asset Service Provider (VASP) may continue to hold and use ​tokens issued by related parties to settle network gas fees when such acquisition for ​tokens predate the Virtual Asset User Protection Act (the Act).

The Financial Supervisory Service (FSS) has issued a limited no-action letter allowing ​a VASP to maintain and use pre-existing holdings of related-party tokens exclusively ​for network gas fee purposes, subject to specific conditions.

Referring to Article 10(5) of the Act, the FSS based its decision on several key factors ​provided by the applicant:

1. The tokens were acquired before the Act's implementation

2. The tokens are used exclusively for network gas fees

3. Immediate service suspension of other virtual assets currently supported for ​trading could significantly impair user’s convenience

4. Limited holdings of the tokens as its value was less than KRW1.5 million

5. No active trading support for the token

6. VASP's commitment to no additional acquisitions and future disposal plan of the ​tokens

Important Limitations:

The FSS emphasized that this no-action letter:

1. Applies only to this specific case

2. Does not constitute a general exemption for related-party token holdings

3. Is based on the transitional period between pre and post-Act implementation

Key Takeaway: VASPs should review any related-party token holdings and assess ​compliance with Article 10(5) of the Act. This no-action letter suggests a narrow path ​for managing tokens (acquired before the Act enactment) while developing disposal ​plans.

For specific legal advice regarding compliance with the Virtual Asset User Protection ​Act, please contact Hanyoung Law.