South Korea is reportedly about to lift a seven-year restriction on virtual asset trading and brokerage businesses being recognized as ‘venture companies.’ This means they would be able to apply for tax breaks and financing support.
Despite recent indications that more substantial regulation could be incoming, this policy change may signal South Korea moving toward a stance closer aligned with current United States policy under President Donald Trump, which embraces the digital assets space in the name of supporting innovation.
On September 9, the South Korean Ministry of SMEs and Startups (MSS) confirmed the partial amendment to the ‘Enforcement Decree of the Special Act on Fostering Venture Businesses,’ opening the path for digital asset firms to be recognized as venture companies.
According to a report by local outlet Newsis, the MSS stated that the decision “reflects the changing global status of the virtual asset industry and the maturation of the domestic user protection system,” adding that it “lays the foundation for the full-scale cultivation of deep-tech industries, core to the digital asset ecosystem, such as blockchain and cryptography.”
The restriction was first imposed in October 2018, when the government rejected a proposal from the MSS to add virtual asset firms to the government’s official list of certified venture companies, a decision that also put the South Korean blockchain industry on the hook for potentially more taxes.
Industry stakeholders at the time widely criticized the move as damaging to South Korea’s competitiveness. A statement by blockchain and digital asset lobby groups, including the Korea Blockchain Association, the Korea Blockchain Startup Association, and the Korea Industry Promotion Association, said the restriction would “discourage the industry as a whole.”
However, it appears the government has now come around to such arguments, with the revised proposal approved at a Cabinet meeting on Tuesday and reportedly set to take effect on September 16.
“This regulatory improvement is a measure to secure future growth engines in line with the global trend of the digital asset industry,” said Minister of SMEs and Startups Han Seong-sook. “We will focus our policy capabilities on fostering a transparent and responsible ecosystem to facilitate the smooth inflow of venture capital and the growth of new industries.”
Adoption rises
The South Korean government’s apparent change of heart on the legal status of certain digital asset businesses likely had a rage of motivators, not least a significant pro-crypto swing in the U.S. since President Trump took office in January.
But beyond the oversized international influence of U.S. policy, the move may also have been inspired by a recent increase in digital asset trading and adoption in South Korea.
A report by the Bank of Korea (BOK) in April revealed that digital asset trading volume in the country surpassed its stock market volume in 2024. It showed that the combined value of digital assets held by the Digital Asset Exchange Association (DAXA), an industry organization made up of the five major digital asset exchanges in South Korea, Upbit, Bithumb, Coinone, Korbit, and Gopax, stood at KRW104 trillion ($73.3 billion) as of the end of 2024.
Further evidence came in the form of the recently published Crypto Adoption Index 2025, from blockchain analysis firm Chainalysis, which saw South Korea move up to 15th in the global adoption rankings, from 19th last year.
This surge in digital asset interest has clearly stirred South Korea’s lawmakers and regulators into action.
On September 5, the country’s top finance sector regulator, the Financial Services Commission (FSC), implemented new guidelines capping digital asset lending interest at 20% annually and banning leveraged and third-party lending. The new rules, which took immediate effect, are to be “self-regulated” by DAXA, for the time being, but the FSC promised to “quickly pursue legislation” along similar lines.
While this appears to demonstrate that a note of caution remains with South Korea’s market overseers, Tuesday’s reversal of the seven-year restriction on digital asset firms being recognized as venture companies could indicate that the country is—reluctantly or otherwise—beginning to soften its stance on the digital asset space.
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Source: https://coingeek.com/south-korea-policy-u-turn-favors-crypto-firms/