South Korea’s crypto reform plans offer tax cuts and funding access to companies

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South Korea’s crypto reform plans offer tax cuts and funding access to startups
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The move would give digital asset firms access to tax breaks and state funding.
Dunamu paid ₩24 billion in taxes after losing venture status in 2018.
Policy is part of President Lee’s pro-crypto economic strategy.

South Korea is moving to formally recognise crypto businesses as venture companies, a decision that could give the industry access to tax relief, government-backed loans, and startup funding for the first time.

The Ministry of SMEs and Startups has introduced a proposal to reclassify virtual asset firms, removing them from a list of restricted industries that includes gambling and nightlife.

If passed, the policy would reverse a long-standing rule that has blocked crypto startups from the country’s thriving venture ecosystem.

This legislative push follows years of regulatory exclusion, with one major flashpoint in 2018. Dunamu, the parent company of crypto exchange Upbit, lost its venture status and was forced to pay ₩24 billion ($18 million) in taxes.

Dunamu challenged the decision in court but lost, highlighting the financial consequences of South Korea’s previous stance.

The ministry now says it wants to acknowledge the innovative and entrepreneurial qualities of crypto companies, bringing them in line with other emerging technology sectors.

New law aligns with Seoul’s broader pro-crypto pivot

The proposal marks a significant departure from previous policy. Until now, crypto-related businesses have been grouped with sectors barred from receiving government support.

The proposed revision would remove virtual asset firms from this restricted category, allowing both new and existing startups to register as venture businesses without risking their certification.

The ministry argues that the new framework will expand South Korea’s venture ecosystem and promote growth in the blockchain and crypto industries.

Public feedback on the draft law is being collected until 18 August 2025, signalling the beginning of a formal legislative process.

If enacted, it would enable crypto firms to access the same support tools—such as tax cuts, subsidies, and loan guarantees—that are currently available to other recognised startups.

The change could also benefit companies that already hold venture status and want to expand into crypto, which previously risked losing their designation if they added digital asset operations to their business models.

President Lee’s crypto policies begin taking shape

The venture company proposal is one of several initiatives under President Lee Jae Myung’s new administration. Since taking office last month, Lee has made digital assets a cornerstone of his economic strategy.

His government is supporting the approval of spot Bitcoin exchange-traded funds (ETFs), exploring a won-based stablecoin, and reviewing the ongoing ban on institutional trading of cryptocurrencies.

Major South Korean banks are already responding. Some have filed trademarks for stablecoin products, while others are working on blockchain infrastructure and digital wallet services.

Industry legitimacy and investment may follow

The proposed legal amendment could have wide-reaching effects beyond tax incentives.

Recognising crypto firms as venture companies may lend credibility to an industry that has long operated on the fringes of formal finance in South Korea.

Greater legitimacy could attract institutional investors, encourage new business formation, and reduce compliance-related friction.

It may also align South Korea with other markets advancing similar policies, such as the European Union’s MiCA framework and Japan’s reforms to allow limited crypto fundraising.

With venture-backed crypto projects potentially gaining access to bank loans and innovation grants, the ecosystem may see accelerated development and a stronger foothold in South Korea’s broader tech economy.

Public submissions on the proposal are currently open, with final decisions expected later this year.



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