South Korea Removes Barriers for Crypto Firms to Obtain Venture Company Status
South Korea is set to lift restrictions that have barred cryptocurrency businesses from qualifying as venture companies, a change that will grant these firms access to a range of tax incentives and financial support. The amendment to the Enforcement Decree of the Venture Business Act was approved during a cabinet meeting on Tuesday by the Ministry of SMEs and Startups, as reported by KoreaTechDesk.
The regulatory revision, effective September 16, removes previous prohibitions on virtual asset trading and brokerage companies from receiving venture certification. This certification is critical as it unlocks benefits such as tax reductions, research and development grants, credit guarantees, and broader financing opportunities.
Background and Rationale for the Regulatory Shift
The ban on crypto firms qualifying as venture companies was originally imposed in October 2018 amid concerns over the speculative risks posed by cryptocurrencies. The government indicated plans to lift this restriction in July, following consultations with the public and industry stakeholders.
The Ministry cited the evolving global acceptance of digital assets and the development of robust user protection mechanisms as key factors motivating the policy change. This regulatory improvement aims to align South Korea’s crypto sector with international trends and foster future growth.
Government Expectations and Industry Outlook
Minister of SMEs and Startups Han Seong-sook emphasized the goal of creating a transparent and responsible ecosystem to attract venture capital and stimulate innovation within the crypto industry. She stated, “We will focus our policy capabilities on creating a transparent and responsible ecosystem to facilitate the smooth inflow of venture capital and the growth of new industries.”
Following the lifting of restrictions, the Ministry anticipates accelerated expansion in virtual asset trading, brokerage services, as well as technological areas such as blockchain, smart contracts, and cybersecurity.
Growth Momentum in South Korea’s Crypto Market
The regulatory easing coincides with a broader pro-crypto stance under President Lee Jae-myung’s administration, which has advanced legislation including a bill to legalize stablecoins. South Korea’s cryptocurrency market is projected to generate $1.1 billion in revenue by 2025 and grow to $1.3 billion in 2026, according to Statista.
The country’s crypto exchange user base has surged to over 16 million, representing more than 30% of the population, a figure boosted notably after the 2016 U.S. presidential election.
FinOracleAI — Market View
The removal of venture company restrictions for crypto firms in South Korea is a positive development likely to enhance investor confidence and stimulate sector growth. By enabling access to tax incentives and financing, this policy will lower barriers for startups and established firms to innovate and expand. However, market participants should monitor the implementation of these changes and the government’s ongoing regulatory approach to ensure sustained industry stability. Key risks include potential shifts in global crypto regulations and domestic political developments.
Impact: positive
