South Korea’s latest U-Turn – Why new venture status for crypto firms matters

Key Takeaways

In a bid to strengthen its crypto sector, South Korea will allow exchanges and brokerages to apply for venture certification starting 16 September. The reform will open doors to tax incentives and funding. 

South Korea is opening new doors for its crypto sector.

In a move that could reshape industry growth, the Ministry of SMEs and Startups has approved revisions to the Venture Business Act. This will clear the way for digital asset trading and brokerage firms to qualify as venture companies.

South Korea lifts crypto ban

The policy shift, announced during a cabinet meeting on 9 September, grants crypto businesses long-denied access to tax incentives and financing support, according to local outlet KoreaTechDesk. The revision is set to take effect on 16 September, when crypto companies in South Korea will, for the first time in years, be able to apply for venture certification.

The designation offers access to tax incentives, investment opportunities, and state-backed financial support, placing virtual asset startups on the same footing as other high-growth industries.

The previous restrictions dated back to October 2018, when regulators grouped crypto ventures in the same category as gambling and nightlife businesses amid a wave of speculative trading and public skepticism.

At the time, officials argued the move was necessary to protect consumers. However, critics contended it placed South Korea at a disadvantage compared to global peers. In fact, industry voices have long argued that the ban stifled innovation and undermined the nation’s position in fintech and blockchain development.

How will things change?

Since then, the global regulatory environment has shifted considerably, most notably in the United States. This has introduced new rules for stablecoins and allowed major crypto firms to list publicly.

South Korea’s Ministry of SMEs and Startups now expects the updated policy to accelerate growth in virtual asset trading, brokerage services, blockchain applications, smart contracts, and cybersecurity technologies.

Minister Han Seong-sook described the move as a “regulatory improvement” designed to secure “future growth momentum in line with the global trend of the digital asset industry.”

She further added, 

“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.”

What’s more?

South Korea’s policy reversal comes as part of a broader global race to position itself as a leading crypto hub, with the U.S setting the pace through regulatory clarity and institutional adoption.

And yet, even as the door opens for venture-backed growth, the domestic exchange market tells a story of uneven fortunes.

Industry giants like Dunamu and Bithumb are thriving, chasing IPOs and drawing investor confidence. All while smaller rivals such as Coinone struggle to stay afloat under mounting regulatory and financial pressures.

With Upbit and Bithumb commanding 96% of the market share, the new rules may fuel innovation. However, they could also deepen the divide between established leaders and weaker competitors navigating South Korea’s scale-driven crypto landscape.