From Blacklist to Venture Track: Why Korea’s Crypto Policy U-Turn Matters

South Korea has taken a major step toward legitimizing its cryptocurrency sector by lifting a seven-year restriction that kept digital asset firms from being recognized as venture companies. The Ministry of SMEs and Startups approved revisions to the Venture Business Act during a cabinet meeting on September 9, clearing the way for trading and brokerage platforms to qualify for venture status.

The change, effective September 16, will allow crypto businesses to apply for certification that unlocks tax incentives, government-backed financing, R&D grants, and credit guarantees. It marks the first time since 2018 that virtual asset companies in South Korea can access the same benefits as other technology startups, signaling a policy shift aimed at supporting blockchain innovation and digital finance growth.

From Restriction to Recognition

The updated designation places crypto startups on par with other high-growth industries. This represents a sharp reversal from the restrictive approach of October 2018, when regulators categorized digital asset firms alongside gambling and nightlife. At the time, officials defended the move as consumer protection, but critics argued it stifled innovation and undermined Korea’s competitiveness in fintech and blockchain.

Aligning with Global Shifts

The global environment has changed dramatically since then. The United States introduced clearer rules for stablecoins, approved spot Bitcoin ETFs in 2024, and passed the GENIUS Act in 2025 to expand oversight without blocking growth. Against this backdrop, Korea’s policy shift is framed as a move to secure “future growth momentum” and bring domestic regulation in line with international standards.

A Transparent Ecosystem

Minister Han Seong-sook described the revision as a regulatory improvement that balances innovation with responsibility. She emphasized building a transparent ecosystem that can attract venture capital, while reinforcing user protection. The policy builds on Korea’s Virtual Asset User Protection Act, which introduced stricter licensing and safeguards for retail investors.

New Opportunities for Startups

For startups, the reform opens doors to venture certification and benefits such as reduced tax burdens, R&D support, and access to flagship government initiatives like TIPS and the K-Startup Grand Challenge. These programs could now extend support to blockchain ventures, offering not just funding but also exposure to global partners and investors. Analysts suggest this recognition will help position crypto firms as legitimate technology-driven businesses rather than speculative risks.

Beyond Trading: Broader Impact

Industry watchers expect ripple effects across blockchain applications, smart contracts, decentralized finance, and cybersecurity. By integrating crypto firms into the broader startup ecosystem, policymakers are signaling that digital assets are part of the country’s future innovation agenda. This could draw global venture capital and partnerships, accelerating Korea’s bid to strengthen its position in Asia’s fintech race.

Market Realities

However, challenges persist. The domestic exchange market is highly concentrated, with Upbit and Bithumb controlling over 90% of trading volume. While these giants are preparing IPOs and attracting institutional investors, smaller competitors such as Coinone face mounting financial and regulatory pressures. Analysts warn that the new policy may spark innovation but could also widen the gap between established leaders and weaker rivals.

Outlook: A Balancing Act

Despite these risks, momentum is strong. Korea’s crypto market is projected to generate over $1.1 billion in 2025, with more than 16 million citizens—around one-third of the population—already holding exchange accounts. Combined with clearer rules and political backing, the policy shift positions South Korea to compete more aggressively with the U.S., Singapore, and Hong Kong in shaping the future of blockchain and digital finance.

The bottom line: Korea’s U-turn is less about short-term relief for crypto firms and more about long-term positioning in the global digital economy. By reclassifying crypto startups as venture-ready, the government is signaling that blockchain is no longer a fringe experiment but part of the country’s growth strategy. The challenge now will be ensuring that smaller players can survive in a market dominated by giants—and that regulation keeps pace with rapid technological change.