South Korea Lifts Ban on Venture Capital Funding for Cryptocurrency
In a significant policy shift, South Korea has lifted its ban on venture capital funding for cryptocurrency-related enterprises, a restriction that has been in effect since 2018. According to the Seoul Kyungjae newspaper, the Ministry of SMEs and Startups announced that companies within this sector will be able to seek venture capital investments starting September 16.
Details of the Policy Change
The decision came from the State Council, which serves as South Korea’s main executive body alongside its cabinet. The council has authorized a partial amendment to the Enforcement Decree of the Special Act on the Promotion of Venture Businesses, effectively removing the classification of cryptocurrency trading and brokerage companies as “restricted venture businesses.” This decision represents a notable change from the government’s stance under former President Moon Jae-in, who enacted the ban to temper what was perceived as an overheated and speculative cryptocurrency market.
The previous restrictions had sparked criticism from the crypto community, leading to calls for more considerate regulations. Notably, the regulation had also exempted bars, nightclubs, and licensed gambling establishments, underscoring a disparity in how different industries have been treated under the law.
Government’s Vision for the Future
Officials from the Ministry emphasized that the law’s amendment signals an acknowledgment of the evolving global landscape regarding cryptoassets. They highlighted the establishment of new protection measures for users of domestic cryptocurrency exchanges, which aligns with the intention to revitalize the digital asset sector in South Korea. The government expressed the need to cultivate the “digital asset ecosystem,” particularly focusing on firms that specialize in blockchain and cryptography.
By enabling crypto firms with significant technological capabilities and potential for growth to access venture capital, the government aims to level the playing field with other innovative IT companies. Minister Han Seong-sook remarked on the importance of this move, framing it as a crucial moment for the future of the cryptocurrency industry in South Korea.
Industry Reactions
Moreover, the Digital Asset Exchange Association (DAXA), which represents the five largest crypto exchanges in South Korea, welcomed the regulatory evolution. Executive Vice Chairman Kim Jae-jin described the government’s decision to allow regular domestic businesses to engage in cryptocurrency trading as a potentially transformative event for the national crypto market.
