Crypto businesses in South Korea to be reclassified as startups, allowing them potential tax breaks and various benefits
In a significant move for the cryptocurrency industry, South Korea's Ministry of Small-Medium Enterprises and Startups has proposed an amendment to the "Special Act on Promoting Venture Businesses." The proposed change aims to reclassify blockchain and cryptocurrency-related companies as venture businesses, granting them access to government benefits such as tax reductions and financial support.
The amendment, if passed, would officially recognize these firms as venture businesses, providing them with the same advantages that other innovative startups enjoy. Qualified venture companies in South Korea can currently receive significant tax breaks, including a 50% corporate income tax cut for five years and a 75% business real estate acquisition tax cut.
This policy shift reflects a change in perception of the digital asset industry, with established legal and institutional safeguards to protect users. The shift also removes restrictions on digital asset firms and other crypto-affiliated business operators from registering as venture companies, which were previously placed in the list of banned businesses, including gambling facilities.
The proposed law revision is not the only pro-crypto move by the South Korean government. South Korea's new president, Lee Jae-myung, has pledged to support cryptocurrency assets backed by the South Korean Won. In addition, he is working towards lifting the ban on crypto-backed exchange-traded funds and allowing trading for spot Bitcoin ETFs by the second half of this year.
The South Korean Democratic Party, led by Lee, is currently pushing regulators to pass a working draft for the country's first stablecoin bill dubbed "Basic Act on Digital Assets." The government subsidies depend on factors like investment or technological advancement.
The public comment period for the proposed amendment is open until August 18, with no final enforcement date announced. If passed, the amendment is expected to revitalize and expand the venture ecosystem, supporting the growth of the virtual asset industry. South Korea is positioning itself as a global hub for digital finance under President Lee Jae-myung's pro-crypto policies.
In 2018, Dunamu, the parent company of Upbit, was burdened with an additional $18 million in corporate tax due to the revocation of its venture business certification by the government. Dunamu had to forfeit government subsidies it enjoyed, and the company filed a lawsuit to contest the tax but was unsuccessful. Recently, South Korean authorities have seized $3.2 million worth of crypto from fake crypto exchanges.
The proposed amendment represents a significant policy shift in South Korea, aiming to foster innovation and growth in the digital asset sector. The amendment is part of an amendment to the "Special Act on Promoting Venture Businesses," which, if passed, would grant crypto firms tax reductions and other benefits, thereby supporting the growth and expansion of the virtual asset industry in South Korea.
- The amendment, if passed, will reclassify blockchain and cryptocurrency-related companies as venture businesses, offering them tax reductions and financial support similar to other innovative startups.
- The policy shift enables digital asset firms and other crypto-affiliated business operators to register as venture companies, a change that removes previous restrictions and provides them with the same tax benefits as other qualified venture companies in South Korea.
- In addition to the amendment, South Korea's new president, Lee Jae-myung, is supporting cryptocurrency assets backed by the South Korean Won and working towards lifting the ban on crypto-backed exchange-traded funds.
- The South Korean Democratic Party, led by Lee, is currently pushing for the passage of the country's first stablecoin bill, known as the "Basic Act on Digital Assets," aiming to further support the growth of the digital finance industry.
