Seoul to Reclassify Crypto Firms as Venture Companies, Unlocking Subsidies and Tax Break

South Korea’s crypto sector is on the cusp of a breakthrough, with the government proposing to recognize crypto firms as venture companies, potentially unlocking millions in subsidies and tax incentives. Crypto companies’ exclusion from the classification has hindered their access to tax breaks and financial support. Will the proposed amendment mark a turning point?

South Korea Unlocks New Opportunities for Crypto Firms

On Wednesday, South Korea announced plans to potentially allow crypto businesses to qualify as venture companies, paving the way for new opportunities. With a significant revision to existing digital asset legislation, South Korea’s Ministry of SMEs and Startups aims to foster crypto growth and innovation.

Significantly, this move would grant crypto firms access to government subsidies, tax benefits, and financial backing. The proposal aims to drive industry growth, ensure policy coherence, and encourage innovation in the crypto sector. The statement read,

Virtual asset businesses with innovative and entrepreneurial qualities, based on new technologies, will be newly recognized as venture businesses. Existing venture businesses will be able to pursue virtual asset-related businesses, which is expected to activate the venture ecosystem and expand its foundation. This is believed to promote the growth of the virtual asset industry.

Interestingly, this move comes following Parataxis Holdings’s groundbreaking announcement to launch South Korea’s inaugural Bitcoin Treasury company. As CoinGape reported recently, the investment firm plans to acquire a majority stake in biotech firm Bridge Bio, with Bitcoin serving as a reserve asset.

South Korea Set to Foster Crypto Growth and Innovation

Over the past few months, the Seoul government has been taking significant steps to position itself as a leader in the global crypto space. The country’s agenda is twofold: to spearhead the crypto industry’s growth and to safeguard the interests of users and investors.

In March, the country introduced Anti-Money Laundering law amendments to tackle growing crypto threats and fraud. The government intends to address the growing concerns among crypto investors within the country.

Last month, the Seoul government proposed new rules to advance the use of stablecoins under the newly elected President Lee Jae-myung. This was followed by a group of banking giants joining hands to launch of won-backed stablecoin.

With the latest move, the ministry intends to establish “legal and institutional safeguards” to protect users. The government announced that the new rules indicate a shift in perception, as the “government is currently focusing on nurturing the digital asset industry.” South Korea’s ministry added that restricting the crypto industry is “inappropriate.”