The South Korean government will lift its seven-year ban on venture capital investments in crypto-asset-related companies, effective September 16, 2025, opening new avenues for capital access.

Executive Summary

The South Korean government has approved the lifting of a seven-year restriction on venture capital investments in crypto-asset-related companies, a move slated to take effect on September 16, 2025. This policy reversal by the Ministry of SMEs and Startups (MSS) aims to integrate blockchain and crypto technology development into the nation’s innovation economy, enabling virtual asset trading and brokerage firms to access venture capital funding and government support programs.

The Event in Detail

The Ministry of SMEs and Startups (MSS) confirmed on September 9 that the Cabinet approved an amendment to the Enforcement Decree of the Special Act on Fostering Venture Businesses. This amendment, effective September 16, 2025, removes the designation of crypto trading and brokerage firms as 'restricted risk businesses.' This restriction, in place since October 2018, previously categorized crypto companies alongside nightlife and gambling operations, preventing them from accessing venture capital funding. The decision reflects a recognition of global developments in the crypto asset industry and a strategic push to promote blockchain and crypto technology development within South Korea.

Policy Mechanics and Capital Access

With the lifting of the ban, cryptocurrency trading and brokerage companies will be eligible to apply for venture certification, a status that significantly enhances their access to capital. This certification unlocks various financing options, attracts risk capital, and provides entry into state-supported innovation programs, including initiatives like TIPS and the K-Startup Grand Challenge. The reform effectively places digital asset ventures on par with other 'deep-tech' sectors, such as biotechnology, semiconductors, and artificial intelligence, signaling a fundamental shift in regulatory perception and a broadening of investment opportunities for the sector.

Business Strategy and Market Positioning

The South Korean government's strategic pivot aligns with its objective to foster blockchain and cryptography as key 'deep tech' fields and to secure future growth engines. This policy reversal reflects a broader maturation of global digital asset markets and South Korea's enhanced regulatory framework, which includes mandatory registration for virtual asset service providers since 2021 and the enactment of a user protection law in 2024. Officials cited international precedents, such as the U.S. approval of spot Bitcoin ETFs in January 2024 and new legislation regulating stablecoins in July, as evidence of digital assets’ growing legitimacy. By reclassifying crypto businesses, South Korea aims to put them on an even footing with other innovative enterprises, moving away from a restrictive stance that had grouped them with high-risk leisure industries.

Broader Market Implications

The lifting of this ban is anticipated to stimulate a significant inflow of venture capital into South Korean crypto startups, fostering a more robust and innovative domestic ecosystem. Jin-jin Kim, Vice Chairman of the Korea Digital Asset Exchange Association (DAXA), described this policy change as a 'turning point' for the Korean crypto industry. In the short term, this is expected to increase investor interest and facilitate the growth of nascent blockchain technologies. In the long term, the move positions South Korea as a more crypto-friendly jurisdiction, potentially attracting international crypto businesses and setting a precedent that could influence other countries' regulatory stances on digital assets.