If South Korea removes its limitations on crypto companies, they could receive venture status, access to tax discounts, capital, and regulatory advantages.
On Wednesday, the Ministry of SMEs and Startups in South Korea declared that it intends to remove the limitations that keep enterprises involved in cryptocurrency from being eligible to become venture companies.
Companies in the “virtual asset” industry are currently not included in the government’s venture classification, which restricts their ability to receive financial assistance and other tax benefits. According to the ministry, a “shift in perception” of the digital asset business and the creation of “legal and institutional safeguards” to protect users are reflected in the proposed amendment.
According to the release, “the government is currently focusing on nurturing the digital asset industry,” and users already have legal protections after crypto legislation was put into place last year. Therefore, it is “inappropriate” to restrict the industry.
The ministry will accept public feedback on the plan through August 18. The date of final enforcement has not yet been disclosed.
The consequences for the cryptocurrency sector in South Korea
The proposed modification would allow cryptocurrency companies to qualify as venture capital firms. Additionally, venture firms could grow into the digital asset market without losing their classifications.
“This is expected to revitalize and expand the venture ecosystem and support the growth of the virtual asset industry.“
In South Korea, businesses that meet the requirements to be classified as “ventures” are eligible for several government advantages. They include a 75% tax cut on company real estate acquisitions, a 50% corporate income tax cut for five years, and up to 70% off television advertising.
South Korea wagers on cryptocurrency.
The suggested modifications are in line with South Korea’s increasingly crypto-friendly policies.
On Sunday, the Bank of Korea notified commercial banks participating in the central bank digital currency (CBDC) pilot that the trials had been temporarily halted. The suspension is intended to allow the government time to explain its stablecoin policy and how a CBDC may fit into the larger digital financial ecosystem, a senior official from one of the banks told local media.
Lee Jae-myung, the recently elected president, ran on a platform of promising cryptocurrency. One of the promises was to allow the issuance of stablecoins based on the local fiat currency.
Following stablecoin trademark filings, shares of Kakao Bank, Kookmin Bank, and the Industrial Bank of Korea increased from 10% to 19%, according to a report published by Cointelegraph on Tuesday. This indicates that investors are becoming more confident about the country’s cryptocurrency direction.