South Korea to unlock crypto innovation with venture status and tax breaks

South Korea is set to amend its regulatory framework for the cryptocurrency industry by lifting the ban on cryptocurrency companies applying for venture company status. This policy shift, announced by the Ministry of Science and ICT and the Ministry of Strategy and Finance, aims to stimulate innovation and attract investment into the blockchain sector. Previously, such firms were excluded from venture status due to concerns over financial stability and investor protection.

The government has also outlined a range of tax incentives and financial support measures for qualifying blockchain and crypto firms. These incentives include reduced corporate tax rates, exemptions on capital gains for early-stage investors, and access to government-backed venture capital funds. These measures are expected to incentivize startups and existing companies to scale operations and explore more sophisticated blockchain applications.

According to a draft policy document reviewed by local media, the revised venture status criteria will focus on the technological innovation and potential societal impact of a company’s products or services. This change could allow companies that develop decentralized finance (DeFi) platforms, blockchain-based identity verification systems, and smart contract solutions to qualify for government benefits.

Industry analysts have noted that the decision could lead to a significant increase in funding for the domestic blockchain ecosystem. South Korea has long been recognized for its strong technology infrastructure and tech-savvy population, but the regulatory environment had previously limited the growth of the crypto sector. By aligning venture incentives with blockchain innovation, the government is signaling its intent to position South Korea as a regional leader in fintech and digital innovation.

The policy change is expected to take effect in early 2025, pending approval by the National Assembly and final regulatory adjustments. The Ministry of Strategy and Finance has emphasized that while the new rules will encourage growth, strict compliance and risk management standards will still apply to all venture-designated cryptocurrency firms. This approach reflects the government’s broader strategy of fostering technological advancement while maintaining macroeconomic stability.