South Korean cryptoasset-related companies can now apply for venture capital (VC) funding after Seoul abolished a seven-year-old ban.
The South Korea newspaper Seoul Kyungjae reported that the Ministry of SMEs and Startups says the existing ban on crypto firms’ VC funding will end on September 16.
The ministry said the State Council, South Korea’s chief executive body and ministerial cabinet has signed off on the move.
VC Funding for Crypto Firms: South Korea Scraps 2018 Ban
The council has agreed to make a partial amendment to the Enforcement Decree of the Special Act on the Promotion of Venture Businesses.
The amendment will effectively scrap the designation of crypto trading and brokerage-providing firms as “a restricted venture business.”
The ban has been in place since October 2018. At the time, the government of President Moon Jae-in said it was imposing the ban to help cool an “overheated, speculative” market.
The government’s move drew ire from the crypto community. In South Korea, only bars, nightclubs, and licenced gambling venues are subject to similar VC investment restrictions.
The ministry explained that the amendment “reflects the changing global status of the cryptoasset industry.”
It added that the law now provided a wide range of protection systems for domestic crypto exchange users.
The ministry also spoke about the need to “foster” industries in the “digital asset ecosystem.” It made special mention of companies that work with blockchain and cryptography-related technology.
This move, the government added, will allow crypto companies with technological prowess and growth potential to apply for VC investment.
This, the ministry added, will put them on an even footing with other innovative companies in the IT space. The SMEs Minister Han Seong-sook said:
“We will foster a transparent and responsible ecosystem. We will help facilitate the flow of venture capital and the growth of new industries.”
A ‘Turning Point’ for the Crypto Industry
Meanwhile, the South Korean media outlet Kyunghyang Games reported that Kim Jae-jin, the Executive Vice Chairman of the Digital Asset Exchange Association (DAXA), has welcomed Seoul’s pivot toward progressive crypto regulation.
DAXA is an association that comprises the nation’s five biggest crypto exchanges. Kim
said that the government’s plan to allow ordinary domestic corporations to trade crypto in the near future could prove a “turning point” for the country’s crypto industry.
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