South Korea’s government is moving to formalize its crypto economy with a classic “carrot and stick” strategy. Regulators are officially lifting a 2018 ban that blocked crypto startups from receiving venture status; the “carrot” to fuel domestic innovation. At the same time, they are tightening tax rules on crypto income, the “stick” to ensure every won is accounted for.
This two-pronged approach signals a strategic pivot to cultivate a powerful, homegrown, and fully taxable digital asset industry.
What’s Changing for Crypto Startups?
Effective September 16, South Korea’s Ministry of SMEs and Startups (MSS) will officially remove crypto trading and brokerage from its list of restricted industries for venture certification. This reverses a 2018 policy that controversially lumped crypto firms in with high-risk businesses like pubs and gambling venues.
Related: South Korea to Roll Out New Legislation for Won-Pegged Stablecoins in October
The change means crypto startups can now qualify for crucial government benefits and subsidies. This is a significant shift that could have saved exchange operator Dunamu a staggering $18 million tax bill it faced after its venture status was revoked in 2018.
And What About the New Tax Rules?
Just as the government opens the door for venture benefits, the National Tax Service (NTS) is tightening its grip on compliance. The NTS recently confirmed that any crypto earned from foreign entities, like tokens paid by overseas subsidiaries to local employees, is subject to comprehensive income tax reporting.
This move ensures that as the domestic industry grows with official support, all related income is fully captured under national tax law.
What Does This Signal for South Korea’s Crypto Market?
Both moves are part of a broader strategy under President Lee Jae-myung’s administration to bring structure and legitimacy to the digital asset sector.
By removing barriers to innovation while simultaneously enforcing strict tax compliance, South Korea is engineering a clear, regulated environment designed to make it a major hub for global crypto businesses.
Related: South Korean Regulator Fines First Crypto Whale Under New Law
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