South Korea to Reclassify Crypto Firms as Venture Companies for Subsidies

South Korea is set to reclassify crypto trading and brokerage firms as “venture companies,” a move that would grant these firms access to a range of government subsidies, tax incentives, and financial support. This proposal, issued by the Ministry of SMEs and Startups, aims to amend the startup law to include Virtual Asset Service Providers (VASPs) under the venture company umbrella. The current law, which has been in place since 2018, explicitly excluded blockchain-based crypto firms from receiving venture certification, categorizing them alongside gambling venues and nightclubs.

The proposed revision seeks to reverse this exclusion, potentially legitimizing the country’s growing digital asset sector. Companies with venture status in South Korea enjoy various benefits, including tax reductions and easier access to state-backed financing. These benefits were previously unavailable to crypto firms, as seen in the case of Dunamu, the operator of Upbit, which faced an $18 million corporate tax bill after its venture certification was revoked. Dunamu’s legal challenge to this ruling was unsuccessful.

The ministry’s new proposal argues that recognizing “innovative, business-viable” crypto service providers as venture firms would expand the country’s venture ecosystem and accelerate the growth of the virtual asset industry. This shift aligns with President Lee Jae Myung’s broader support for the digital finance sector, which includes lifting restrictions on crypto ETFs and institutional trading, as well as backing legislative efforts to introduce Korean won-based stablecoins. This move has already sparked a wave of trademark filings by major financial institutions.

The proposed reclassification reflects a significant change in South Korea’s approach to its crypto industry, transitioning from viewing it as a speculative outlier to integrating it into the formal innovation economy. If adopted, the amendment could pave the way for increased investment and regulatory clarity for domestic crypto firms. This development comes as the Financial Services Commission (FSC) has presented a roadmap to the Presidential Committee on Policy Planning, proposing the approval of spot crypto ETFs. This move is part of President Lee Jae-myung’s campaign promise to modernize digital asset rules and boost opportunities for younger investors.

The plan outlines implementation measures for spot crypto ETFs and regulatory frameworks for won-based stablecoins in the second half of 2025. Historically, the FSC has blocked crypto ETFs due to concerns over volatility and financial risk, maintaining that cryptocurrencies were unsuitable as underlying assets. However, the proposed changes signal a more favorable stance towards integrating digital assets into the mainstream financial system, potentially fostering a more supportive environment for the crypto industry in South Korea.