South Korea plans to lift crypto venture business restrictions

South Korea’s Ministry of SMEs and Startups announced Wednesday that it plans to lift restrictions preventing crypto-related businesses from qualifying as venture companies.

Currently, firms operating in the “virtual asset” sector are excluded from the government’s venture classification, which limits their access to various tax breaks and financial support. The ministry said the proposed amendment reflects a “shift in perception” of the digital asset industry and the establishment of “legal and institutional safeguards” aimed at protecting users.

The announcement said that “the government is currently focusing on nurturing the digital asset industry,” and following last year’s implementation of crypto regulations, legal protections for users are already in place. For this reason, restricting the industry is “inappropriate.”

The ministry will accept public comments on the proposal until Aug. 18. A final enforcement date has not yet been announced.

The implications for South Korea’s crypto industry

The proposed change would allow crypto businesses to be qualified as venture companies. Furthermore, existing venture companies would be able to expand into the digital asset space without losing their classifications.

“This is expected to revitalize and expand the venture ecosystem and support the growth of the virtual asset industry.“

Being qualified as a “venture” allows companies in South Korea to access a series of government benefits. They include a 50% corporate income tax cut for five years, a 75% business real estate acquisition tax cut and broadcast ad discounts of up to 70%.

South Korea bets on crypto

The proposed changes follow a growing trend of crypto-friendly policies in South Korea.

On Sunday, the Bank of Korea informed commercial banks participating in its central bank digital currency (CBDC) pilot that the trials were temporarily suspended. A senior official from one of the banks told local media that the pause is meant to give the government time to clarify its stablecoin policy and how a CBDC might fit into the broader digital finance ecosystem.

Newly elected President Lee Jae-myung campaigned on a list of crypto promises. Among those was allowing the issuance of stablecoins pegged to the local fiat currency.

On Tuesday, Cointelegraph reported that shares of Kakao Bank, Kookmin Bank and the Industrial Bank of Korea rose by from 10% to 19% following stablecoin trademark applications, signaling growing investor confidence in the country’s crypto direction.