South Korea Lifts VC Ban on Crypto Firms: A New Era of Growth and Innovation

After seven years of strict restrictions, South Korea has made a groundbreaking move – the government has lifted the ban that prevented crypto companies from obtaining venture capital (VC) status. This reform opens the door to tax incentives, credit guarantees, and improved financing opportunities, while signaling the country’s ambition to become a leader in digital assets.

End of the “Gambling and Speculation” Era The ban was introduced in 2018, when crypto firms were classified in the same category as gambling halls and nightclubs due to fears of excessive speculation and market panic. However, this label long stifled innovation and weakened Korea’s global competitiveness. Much has changed since then:

🔹 In 2021, Korea launched a licensing system for virtual asset service providers.

🔹 In 2025, a user protection law took effect, introducing deposit safeguards, mandatory record-keeping, and a ban on unfair trading practices. These measures have since professionalized the market and rebuilt trust among both users and investors.

Opening the Door for Venture Capital The Ministry of SMEs and Startups confirmed that the amended decree will take effect on September 16. Crypto companies can now gain venture enterprise status and tap into the benefits once reserved only for traditional startups. Lawyer Ted Koo emphasized that the new rules will give crypto firms access to tax breaks, R&D funding, and broader state support. “This reform will unlock the flow of venture capital and foster the rise of new industries within blockchain,” he stated.

Presidential Push for Crypto Policy Under President Lee Jae-myung, South Korea has taken a proactive stance toward digital assets. His administration has already moved to legalize stablecoins, and according to Statista, the Korean crypto sector is expected to generate $1.1 billion in revenue next year and grow to $1.3 billion by 2026. Another striking fact: Korean crypto exchanges now serve over 16 million users – more than 30% of the country’s entire population.

Looking Ahead The repeal of the ban is more than a regulatory adjustment – it’s a clear message that South Korea does not want to lag behind the U.S. or Europe. Just as the U.S. SEC approved Bitcoin ETFs and Congress set rules for stablecoins, Korea is positioning itself to attract capital and foster innovation. Minister Han Seong-sook summed it up:

“Our goal is to build a transparent and responsible ecosystem that enables the flow of venture capital and secures future growth engines.”

✅ After seven years of restrictions, South Korea is back on the map of nations supporting blockchain and crypto development. The key question now is whether this move will truly spark an innovation boom – or bring new challenges the market must adapt to.

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