South Korea’s Venture Business Act Revision Could Let Upbit and Other Crypto Exchanges Access Tax Incentives

• Venture certification opens tax incentives and funding for crypto firms

• Applies from 16 September after revisions to the Venture Business Act

• Market concentration remains high: Upbit and Bithumb control roughly 96% of domestic trading volume

South Korea venture certification: crypto exchanges can apply from 16 September—access tax incentives and funding now. Read the full update and next steps.

What is South Korea venture certification for crypto firms?

South Korea venture certification is a legal designation under the revised Venture Business Act that lets eligible crypto exchanges and brokerages qualify as venture companies, granting them access to tax breaks, state-backed financing and venture capital opportunities. The change takes effect 16 September and targets faster growth in virtual asset industries.

How does the policy change affect exchanges and brokerages?

The Ministry of SMEs and Startups revised the Venture Business Act to permit digital asset trading and brokerage firms to apply for venture status. This status provides tax incentives, preferential financing and eligibility for government-backed programs previously unavailable to crypto ventures.

Industry participants expect the designation to lower financing costs and improve fundraising prospects for startups focused on blockchain, smart contracts and crypto custody services.

Why did South Korea reverse the long-standing restriction?

Regulators originally restricted crypto ventures in October 2018 amid speculative trading and public concern. Over time, global regulatory frameworks and market maturation prompted a policy reassessment.

The Ministry framed the revision as a “regulatory improvement” to secure future growth momentum and align with international trends in digital asset regulation. Local industry commentary noted the prior classification stifled innovation and placed South Korea at a competitive disadvantage.

When does the change take effect and who can apply?

The revision becomes effective on 16 September. Eligible applicants include licensed exchanges and brokerage firms that meet venture company criteria set by the Ministry of SMEs and Startups.

Firms will need to document governance, compliance mechanisms and growth potential to qualify for venture status and its attendant benefits.

How to apply for venture certification (step-by-step)

1. Review venture company eligibility criteria published by the Ministry of SMEs and Startups.
2. Prepare supporting documents: corporate structure, financials, compliance policies and growth plan.
3. Submit the application through the designated government channel and await certification review.
4. If approved, register for tax incentive programs and state-backed financing schemes as applicable.

What are the expected market impacts?

Analysts anticipate stronger venture funding flows into virtual asset trading, custody solutions, blockchain application development, smart contract services and cybersecurity startups.

However, concentration in the domestic exchange market remains a risk. Established firms such as Dunamu (Upbit) and Bithumb occupy dominant positions, controlling about 96% of trading volume, which may widen the gap between incumbents and smaller rivals.

Frequently Asked Questions

How does the certification affect taxes for crypto companies?

Venture status qualifies companies for targeted tax incentives under South Korean law, which can include reductions or credits designed to support early-stage growth. Firms must meet compliance and reporting standards to benefit.

Will this change attract foreign investment?

Yes. By aligning incentives and regulatory clarity with global trends, the policy aims to attract venture capital and institutional interest. The broader impact depends on implementation and ongoing regulatory coordination.

Key Takeaways

• Certification date: Effective 16 September—crypto firms can apply for venture status.
• Benefits: Access to tax incentives, state-backed financing and venture capital pools.
• Market outlook: Expected boost to blockchain startups, but dominant exchanges may retain a large share of trading volume.

Conclusion

The Venture Business Act revision marks a pragmatic shift in South Korea’s approach to virtual assets, enabling exchanges and brokerages to pursue venture certification from 16 September. This policy can unlock tax incentives and funding that support innovation in trading, blockchain applications and cybersecurity, while policymakers and industry participants must manage competitive concentration to ensure broad-based growth.

Published: 2024-09-09 · Updated: 2024-09-09 · Author: COINOTAG