South Korea has removed a seven-year restriction preventing crypto asset-related companies from accessing venture capital (VC) funding.
In essence, the move signalled a shift in the country’s approach to digital assets. The prohibition, initially introduced in October 2018, was aimed at curbing what the government described at the time as an ‘overheated, speculative’ market.
According to Yahoo Finance, the Ministry of SMEs and Startups confirmed that the ban will be formally lifted on 16 September, following approval from the State Council, South Korea’s highest executive and ministerial body. The council agreed to partially amend the Enforcement Decree of the Special Act on the Promotion of Venture Businesses, which had previously classified crypto trading and brokerage firms as ‘restricted venture businesses.’
The ministry emphasised that the amendment aligns with the evolving global landscape of the crypto asset sector and noted that domestic legislation now incorporates wider protective measures for users of crypto exchanges. Officials also highlighted the potential for venture investment to support companies engaged in blockchain and cryptography technologies, placing them on a similar footing with other IT companies looking for VC funding.
A representative from the ministry said the changes are intended to support a more transparent and responsible ecosystem while facilitating capital flow to emerging industries within the digital asset space.
Industry response and outlook
Industry bodies have largely welcomed the decision. A South Korean media report cited a representative from the Digital Asset Exchange Association (DAXA), which represents the country’s five largest crypto exchanges, describing the policy shift as a potential turning point for the local crypto market. The official also suggested that allowing domestic corporations to engage in crypto trading could further support sector growth and innovation.
Market analysts note that before this amendment, only bars, nightclubs, and licenced gambling venues faced comparable VC investment restrictions, highlighting the significant impact of the decision on the domestic crypto ecosystem.
