September 14, 2025 — Global Blockchain Newswire — The World Blockchain Association (WBA) reports that South Korea has officially lifted a seven-year restriction on cryptocurrency and blockchain startups, sparking renewed optimism for innovation, venture capital, and entrepreneurship in the country’s digital asset sector.
With the Cabinet’s approval of an amendment to the Special Act on the Promotion of Venture Businesses on September 9, the Ministry of SMEs and Startups announced that “blockchain/virtual asset (cryptocurrency) trading and brokerage” will be removed from the “restricted/ban list” of industries. The reform will take effect on September 16, 2025.
This move is widely regarded as a pivotal moment for South Korea’s Web3 ecosystem. According to the World Blockchain Association, the decision could create fertile ground for growth in areas such as Cryptocurrency, Bitcoin, Ethereum, DeFi, NFT, DAO, Tokenization, and Stablecoin innovation.
Seven Years of Restrictions: The Lost Era for Korean Crypto Startups
In October 2018, South Korea imposed a sweeping ban on classifying virtual asset firms as “venture businesses,” equating them with industries such as casinos and nightclubs. At the time, regulators justified the measure by citing speculative bubbles, rampant retail investor losses, and market instability.
The infamous Shinil Group ICO scandal exemplified these concerns. The company raised more than $53 million from nearly 100,000 investors, promising gold allegedly retrieved from a Russian shipwreck. The claims were later revealed to be fabricated, leaving thousands of investors with multimillion-dollar losses.
These incidents created long-lasting skepticism toward cryptocurrency startups. As a result, Korean blockchain companies were systematically excluded from tax incentives, state-backed credit guarantees, and government innovation funds.
Data from Tracxn highlights the chilling effect: only one blockchain startup was founded in South Korea between January and July 2025, compared to 170 new companies launched in 2018 during the global ICO boom. Venture capital flows also plummeted — in the past year, blockchain startups raised just $13.3 million across four equity rounds, a sharp 58.82% decline from $32.3 million raised in the same period a year earlier.
Policy Shift Driven by Regulatory Maturity and Global Trends
According to the World Blockchain Association, the Korean government’s decision is not a sudden loosening of oversight, but the result of regulatory evolution and alignment with international trends in digital finance.
Key milestones include:
- 2021 Amendment to the Act on Reporting and Use of Specific Financial Information (FTRA): Introduced AML/KYC obligations for Virtual Asset Service Providers (VASPs), integrating them into Korea’s financial compliance framework.
- 2024 Virtual Asset User Protection Act: Empowered financial authorities with supervisory powers, mandated asset custody standards, and introduced safeguards against unfair trading practices.
Together, these frameworks established both anti-money laundering supervision and investor protection mechanisms, enabling policymakers to shift from blanket restrictions toward regulated innovation.
Minister Han Seong-Sook of the Ministry of SMEs and Startups emphasized:
“This reform reflects our commitment to align with global digital asset trends while ensuring transparency and user protection. By re-establishing venture capital pathways, we aim to create a responsible ecosystem that nurtures new growth engines for the Korean economy.”
A New Spring for Crypto Venture Capital
With restrictions lifted, Korean startups in DeFi, Web3 infrastructure, and blockchain applications can now access domestic venture capital and state-backed financing programs. The World Blockchain Association points out that this will significantly lower barriers for early-stage fundraising and could accelerate Korea’s competitiveness in the global blockchain industry.
Key players poised to benefit include:
- Hashed — A Seoul-based venture capital firm recognized globally for backing projects such as Aptos and Injective. Hashed combines investment with ecosystem development, frequently organizing hackathons and Web3 community events.
- Dunamu & Partners — The venture arm of Upbit operator Dunamu, which leverages exchange market infrastructure to support strategic blockchain investments.
- Kakao Ventures — The VC arm of Kakao, integrating blockchain with payments and the broader Klaytn/Kaia ecosystem, offering strategic support through traffic and commercialization channels.
- KB Investment — The investment arm of KB Financial Group, capable of providing long-term institutional capital, compliance support, and extensive financial channels.
- Samsung Next — A strategic technology investor that delivers technical validation, global expansion opportunities, and ecosystem-level collaboration for blockchain infrastructure projects.
According to the World Blockchain Association, these VCs are likely to expand their deployment in emerging fields such as DAO governance models, tokenization of real-world assets, NFT marketplaces, and stablecoin adoption.
Implications for Global Blockchain and Cryptocurrency Markets
The lifting of restrictions in South Korea reflects a broader trend: governments are shifting from adversarial stances toward measured integration of cryptocurrency and blockchain innovation into the mainstream economy.
For global stakeholders, Korea’s move signals:
- Stronger Asian Participation in Web3: Korea’s deep technology ecosystem and consumer adoption potential make it a vital hub for the next wave of blockchain innovation.
- Acceleration of Tokenization: With venture capital now available, tokenization of assets — from real estate to intellectual property — is expected to gain momentum.
- Institutional Entry Points: Compliance-friendly regulations and established AML/KYC rules will attract both local banks and global financial institutions.
- Talent Retention: Korean entrepreneurs previously forced overseas may now build locally, strengthening the domestic Web3 ecosystem.
The World Blockchain Association concludes that Korea’s policy shift is not merely a domestic event but a signal of growing global consensus: blockchain and digital assets are no longer speculative novelties but integral components of future economic infrastructure.
About the World Blockchain Association
The World Blockchain Association (WBA) is a global organization dedicated to advancing knowledge, policy dialogue, and innovation in blockchain and digital finance. As a leader in the blockchain and cryptocurrency space, the WBA provides stakeholders with trusted insights at the intersection of technology, regulation, and global economic trends through research, reporting, and thought leadership.
Website: WorldBlockchainAssociation.org
Email: TheWorldBlockchainAssociation@gmail.com
