South Korea Lifts Ban on Cryptocurrency Firms as Venture Companies
South Korean regulators have made a groundbreaking decision to lift a ban that has been in place for nearly a decade, preventing cryptocurrency-focused businesses from qualifying as venture companies. This move marks a significant shift in the country’s approach to digital assets.
Since 2018, cryptocurrency companies operating in South Korea have been unable to be recognized as venture firms due to concerns about the speculative nature of the market at that time. This exclusion meant that these entities were unable to access the benefits enjoyed by traditional firms within the country’s startup ecosystem.
However, on Tuesday, South Korea’s Ministry of SMEs and Startups approved a partial revision to the Venture Business Act, allowing crypto firms to be eligible for venture certification starting September 16. This policy change effectively ends the ban that has been in place for the past three years.
The decision to lift the ban comes as South Korea has softened its stance on digital assets, recognizing the potential of cryptocurrencies to drive innovation, attract global capital, and enhance the nation’s competitiveness in emerging technologies. The momentum towards embracing digital assets has been further fueled by the election of pro-crypto President Lee Jae-myung in June, whose administration has prioritized digital finance reforms and supported innovations like stablecoins.
Regulators believe that lifting the ban on cryptocurrency firms as venture companies will lead to growth in related sectors such as blockchain infrastructure, smart contracts, and cybersecurity. Businesses qualifying as venture firms are entitled to government subsidies, including tax cuts and financial support, which could further stimulate growth and innovation in the digital asset space.
With South Korea being one of the most active crypto markets globally, regulators hope that allowing crypto firms to access venture status will position the country as a hub for digital asset innovation. South Korean Minister of SMEs and Startups, Han Seong-sook, emphasized the importance of fostering a transparent and responsible ecosystem that supports the growth of new industries.
While South Korea is embracing crypto growth, investor protection remains a top priority for the government. In recent months, the country has implemented measures to regulate speculative crypto trading, including banning high-risk leveraged loans and cash-equivalent products, and capping annual interest rates at 20% to safeguard investors.
South Korea’s Financial Services Commission has also issued legal notices to local crypto exchanges, requiring a temporary suspension of crypto lending services until proper regulations are in place. These efforts demonstrate the government’s commitment to ensuring a secure environment for investors while promoting growth and innovation in the cryptocurrency sector.