Crypto Firms in South Korea Set to Finally Gain Legal Status, Tax Incentives

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Crypto fans will love this! South Korea’s government is taking steps to support the crypto industry by officially recognizing crypto businesses as part of its venture ecosystem.

A new proposal from the Ministry of SMEs and Startups aims to let crypto firms register as “venture companies” – a status that gives access to tax cuts, government-backed funding, subsidies, and loan guarantees. If approved, the move could bring crypto startups in line with other tech-driven businesses and help boost innovation across the sector.

Here is everything you absolutely need to know.

A Big Policy U-Turn for South Korea

Right now, crypto businesses in South Korea are excluded from registering as venture companies. That’s because current laws group them with restricted sectors like gambling and nightlife which are categories that don’t qualify for state support.

That restriction has cost crypto firms. In 2018, Upbit’s parent company Dunamu lost its venture status and was hit with an ₩24 billion (around $18 million) tax bill. The company challenged the decision in court, but lost.

The ministry now wants to update the rules. The new proposal would remove virtual asset firms from the restricted list, allowing them to access the same support as other startups.

“Virtual asset businesses with innovative and entrepreneurial qualities, based on new technologies, will be newly recognized as venture businesses,” the ministry said.

Why This Matters for the Industry

If the change is approved, it would mean crypto startups could apply for venture status for the first time, unlocking major benefits. It would also allow existing venture-certified companies to enter the crypto space without losing their status.

According to the ministry, the change would “revitalize and broaden the venture ecosystem” and promote growth in the crypto industry. The government is now collecting public feedback on the proposal, with submissions open until August 18, 2025.

A Clear Direction Under President Lee

The proposal is part of a wider shift under President Lee Jae Myung, who took office last month with a strong pro-crypto stance. His administration is pushing for spot Bitcoin ETFs, planning to introduce a Korean won-based stablecoin, and reviewing the current ban on institutional crypto trading.

Some of the country’s biggest banks are already taking steps, from exploring stablecoin products to filing new trademark applications, showing that interest is building.

Here’s the bottom line:

If passed, this policy could open new doors for crypto businesses in South Korea giving them access to real financial support, and helping the country position itself as a serious player in global crypto innovation.