South Korea Proposes Major Shift for Crypto Firms: Path to Venture Status Opens

South Korea is taking a cautiously optimistic step toward supporting its crypto industry with a new proposal that could grant digital asset companies the same benefits as traditional venture businesses. The Ministry of SMEs and Startups announced the plan on July 9, 2025, which would reverse a 2018 policy that excluded crypto firms from valuable government support programs.

The proposal is not yet confirmed, but early signs suggest a positive outlook for the country’s digital asset sector. Industry observers are watching closely as South Korea moves to balance innovation with regulation in its approach to cryptocurrency businesses.

The proposed changes would allow crypto trading platforms and brokerage services to qualify as venture companies for the first time since 2018. This status comes with significant financial benefits that could help these businesses grow and compete more effectively.

The proposed revision will enable virtual asset trading platforms and brokerage services to qualify for venture company certification, a status that provides advantages such as tax incentives, financing programs, and business development support.

Companies that gain venture status would receive a 50% corporate income tax cut for five years, a 75% reduction in business real estate acquisition tax, and up to 70% discounts on broadcast advertisements. These benefits mirror those available to traditional tech startups and could make South Korea more attractive to crypto businesses.

The change would also work both ways. Existing venture companies would be able to expand into the digital asset space without losing their classifications. This flexibility could encourage more established firms to explore crypto-related opportunities.

The current proposal represents a significant shift from South Korea’s previous stance on crypto businesses. In 2018, the government grouped digital asset companies with industries like nightclubs and gambling facilities, effectively blocking them from venture company benefits.

This earlier policy created real financial consequences for crypto firms. Dunamu, which operates the popular Upbit exchange, lost its venture status in 2018 and faced an additional $18 million in corporate taxes. The company’s legal challenges to the moves were unsuccessful, highlighting the serious impact of the restrictions.

South Korea now wants to support the growth of its digital asset sector. By giving crypto firms venture status, they can access tax breaks, subsidies, and state funding. This change reverses a 2018 policy that excluded them from such benefits.

The timing of this proposal is not coincidental. South Korea has been building a stronger regulatory framework for crypto businesses, which may have given officials more confidence in supporting the industry.

The Virtual Asset User Protection Act was tabled on July 18, 2023, and became law from July 19, 2024. This law established important protections for crypto users and created clearer rules for how digital asset businesses should operate. The improved regulatory environment appears to have convinced policymakers that crypto firms deserve the same support as other innovative businesses.

Since the Virtual Asset User Protection Act – the first regulation specifically targeting Korea’s crypto industry – took effect, the domestic market has been in a state of flux. Despite the confusion, Park Jin-woo, a partner lawyer at Korean law firm Min, views the law, which essentially requires quasi-disclosures for crypto projects, as a potential opportunity for the credible ones.

While the proposal shows promise, its final outcome remains uncertain. The ministry is now seeking public opinions on the proposed changes. Institutions, organizations, and individuals can submit their views online or in written form by August 18, 2025. This public comment period gives various stakeholders a chance to voice their opinions about the proposed changes. The government has set up online channels and traditional mail options for feedback, suggesting they want broad input from the community.

The process reflects South Korea’s careful approach to crypto regulation. Rather than making sudden changes, officials are taking time to gather feedback and consider different perspectives before moving forward.

This venture company proposal fits into a larger pattern of South Korea becoming more supportive of digital assets. The country has been gradually building a more welcoming environment for crypto businesses and investors.

Recent developments include plans for Korean won-based stablecoins and discussions about lifting bans on crypto ETFs. In the first half of 2025, non-profits such as charities, universities, and law enforcement agencies will be permitted to sell virtual assets. By the second half, listed companies and professional investors will gain access to crypto markets.

The market has already shown positive reactions to these policy shifts. Banking stocks have risen significantly as investors anticipate increased crypto activity and the potential for stablecoin services. The public comment period runs until August 18, 2025. After collecting feedback, the government will decide whether to move forward and set an enforcement date.