South Korea lifts major ban on crypto companies

South Korean authorities have lifted a seven-year-old restriction on crypto companies, allowing them to become certified venture capital firms. The amendments to the Decree on the Implementation of the Special Act on the Promotion of Venture Capital Business, approved by the Cabinet, will take effect on September 16.

A 2018 rule that classified cryptocurrencies as a “restricted industry” along with gambling has been scrapped, with regulators instead focusing on strict investor protections and oversight of the digital asset market.

Since 2021, South Korean virtual asset service providers have been required to register with government agencies. This year, the Virtual Asset User Protection Act was passed, ensuring deposit protection and curbing unfair trading practices.

All the changes made allowed the ban to be lifted, allowing crypto companies to receive government support and enjoy tax breaks. According to LIN lawyer Ted Koo, the new rules will also protect existing venture companies from losing their status when switching to digital assets.

Minister of Small and Medium Enterprises and Startups Han Sung-sook said the move is a step towards realizing South Korea’s strategy to attract venture capital to the Block, cryptography and related fields.

This is not the only initiative of South Korean legislators in the field of cryptocurrencies — a bill on stablecoins is due to be passed in October.

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