"No Longer Treated as Entertainment Venues"... The Government to Include Virtual Asset Operators as 'Venture Businesses'

The Ministry of SMEs and Startups is promoting a plan to grant 'venture business' status to virtual asset (cryptocurrency) operators. The intent is to consider virtual asset operators as 'technology-based startups or growth companies,' allowing them to benefit from venture advantages such as startup investment, technology guarantees, and policy financing. Observers note that the virtual asset sector, which has remained outside the institutional framework until now, is now likely to be incorporated into the venture ecosystem for the first time in eight years.

On the 9th, the Ministry announced a partial amendment to the 'Enforcement Decree of the Special Act on Venture Business Promotion,' clarifying that the scope of technology-based industries eligible for venture confirmation would explicitly include the virtual asset industry. This opens the way for companies utilizing blockchain or digital asset technology to be officially recognized as venture businesses if they meet certain technical evaluation criteria.

In South Korea, virtual asset operators have long been classified as industries excluded from venture status. Under the 2018 amended decree, blockchain-based crypto asset trading and brokerage were considered speculative businesses, along with adult entertainment venues and casino operations, and thus excluded from venture certification. Due to this change, Dunamu, the operator of South Korea’s largest crypto exchange Upbit, had its venture certification revoked. This was the first case where venture confirmation was canceled solely due to a change in industry classification.

Without venture certification, companies cannot receive key startup support benefits such as income and corporate tax reductions, Technology Guarantee Fund guarantees, or government R&D project participation. Industry insiders have continued to criticize, saying, "Why are virtual asset operators still treated on the same level as entertainment venues in this day and age?"

The government’s recent shift in attitude reflects the emergence of technology-based blockchain firms and efforts to regain market trust. The growing proportion of businesses focused on technology services rather than coin issuance, as well as the trend of global asset managers incorporating virtual assets as institutional financial assets, have influenced this change.

The industry considers this amendment a first step toward institutional integration of the digital finance sector, but notes there is still a long way to go. In particular, companies established solely for issuing coins or non-operational, project-type businesses are still likely to be excluded from eligibility for venture certification. The government maintains its policy of making determinations based on quantitative assessments of technological capabilities, not merely formality.

Experts emphasize that the virtual asset industry should be viewed as a future strategic sector. One industry official said, "Virtual assets are a new digital industry in which Korea can take a leading role," and explained, "With the world only at the starting line, Korea should not delay institutional reform any further."

Meanwhile, a sense of optimism driven by expectations for institutionalization is now being felt in the domestic virtual asset market. In the National Assembly, lawmakers from the ruling party are actively introducing bills to foster the virtual asset industry and protect users, while commercial banks, internet-only banks, and card companies are rushing to apply for trademarks on KRW-based stablecoins. Related listed company stock prices have been on a steady upward trend. This market change appeared just one month after President Lee Jae-myung, who campaigned on a pro-virtual asset platform, took office.

Reporter: Jeong-hoon Ahn ajh6321@hankyung.com