South Korea has just made a landmark regulatory change: the government has decided to allow venture capital (VC) investment in crypto and blockchain-related companies again, ending a ban that had been in place for nearly seven years. As of September 16, firms involved in crypto trading, brokerage, blockchain, and cryptography will be eligible to apply for VC funding.
This move comes alongside revised protections for users of domestic crypto exchanges and signals the country’s intention to treat digital asset businesses more like mainstream tech startups. The shift promises to energize South Korea’s innovation ecosystem and may have ripple effects across the global crypto community.
Background: The 2018 Ban and Why It Was Imposed
The restriction was first imposed in October 2018 under President Moon Jae-in’s administration, aiming to cool what was seen as an overheated and speculative crypto market.
Crypto trading and brokerage firms were designated “restricted venture businesses,” which blocked them from receiving venture capital support. This classification placed crypto firms in the same regulatory category as industries like gambling, bars, and nightclubs—sectors considered too risky for state-backed funding.
What’s Changing: The New Amendment & Its Effects
The Ministry of SMEs and Startups, with backing from South Korea’s State Council, approved an amendment to the Enforcement Decree of the Special Act on the Promotion of Venture Businesses. This removes crypto firms from the list of restricted venture businesses.
Effective September 16, crypto-related businesses will be able to apply for VC funding and venture certification, making them eligible for tax breaks, grants, subsidies, and state support that were previously off-limits.
The government has emphasized that user protection and industry transparency will remain priorities. This policy shift is also seen as a way of aligning South Korea with global trends and acknowledging the maturity of the crypto sector.
Industry Reaction & Broader Implications
The crypto community has welcomed the reform, with industry leaders calling it a “turning point” for regulation. Companies that had been held back by the 2018 ban now have the chance to secure capital, expand their businesses, and scale operations in a way similar to other high-growth tech startups.
This change is expected to accelerate innovation in blockchain, cryptography, and crypto trading infrastructure. With more funding available, new products could emerge, user protections could improve, and industry standards could be strengthened.
Challenges & What to Watch For
While the law change is positive, execution will be crucial. VC investors are likely to evaluate regulatory clarity, compliance requirements, and tax obligations before committing significant funds.
Crypto firms, for their part, must prove transparency, strong governance, and risk management to gain investor trust. Moreover, this new opportunity coexists with stricter oversight in other areas, such as taxation, meaning companies must balance fresh growth potential with ongoing regulatory risks.
Conclusion
South Korea’s decision to lift its VC funding ban on crypto companies represents a major policy shift toward digital assets. By restoring access to venture investment, the country signals its commitment to supporting innovation while maintaining responsible oversight.
For crypto startups, this change could unlock new capital, strengthen infrastructure, and provide greater market legitimacy. The way firms adapt and capitalize on this opportunity—particularly in blockchain development and crypto brokerage—will shape not only South Korea’s crypto ecosystem but also its influence on the broader global digital asset landscape.
