South Korea Opens Doors: VC Funding Now Allowed for Crypto Companies

South Korea has ended a seven-year ban on venture capital (VC) funding for cryptocurrency companies, effective September 16, 2025, following a cabinet-approved amendment to the Enforcement Decree of the Special Act on Promoting Venture Businesses, as reported by Cryptonews. This landmark decision opens new avenues for blockchain startups, positioning South Korea as a potential hub for digital asset innovation in Asia.

Previously, since October 2018, crypto firms were classified as restricted ventures due to concerns over speculative markets. The ban stifled growth, limiting funding for exchanges, DeFi platforms, and NFT projects. The Ministry of SMEs and Startups, led by Minister Han Seong-sook, now recognizes blockchain as a deep-tech sector, aligning with global trends. The policy shift allows crypto firms to access government subsidies, tax incentives, and VC investments, fostering a transparent ecosystem.

The move is expected to drive significant growth. Startups like Hashed, which invested $28.44 million in 2023, can now scale operations, while firms like Korea Investment Partners may expand their $4 trillion portfolios into crypto. Analysts predict a surge in blockchain innovation, with DAXA’s Kim Jae-jin calling it a “turning point” for the industry. However, firms must comply with strict AML and KYC regulations to ensure investor protection.

Globally, South Korea’s progressive stance could attract international VCs, strengthening its role in the $2 trillion crypto market. The decision follows pro-crypto policies under President Lee Jae-Myung, including plans for spot Bitcoin ETFs. As the nation balances innovation with regulation, this reform signals a bold step toward leading Asia’s blockchain revolution.