The domestic virtual asset market is expected to reach 1,000 trillion won within five years, and yet South Korean blockchain and cryptocurrency companies are facing too many business constraints. For example, initial coin offering is illegal in South Korea, where companies in the blockchain industry cannot be designated as startups. Besides, direct corporate investment in virtual assets is blocked as of now.
“The virtual asset market of South Korea reached 300 trillion won late last year and is expected to grow to 1,000 trillion won in 2026 and at least 40,000 jobs are expected to be created during the course,” Boston Consulting Group recently said, adding, “However, the market is three to five years behind in terms of maturity.”
Initial coin offering in South Korea has been illegal since September 2017 and South Korean companies cannot make any direct investment in virtual assets. On the other hand, global industry leaders such as MicroStrategy, Tesla and Twitter are increasing their investment in the industry at a rapid pace. “The investment by South Korean companies is limited to equity investment in blockchain firms and investment in overseas subsidiaries,” said an industry source, adding, “The ICO ban has blocked industry and market growth, digital finance development and initial financing for innovative firms.”
Besides, the startup designation has been blocked for years by the Act on Special Measures for the Promotion of Venture Businesses. In 2018, the South Korean government allowed golf courses, karaokes, and so on to be designated as startups while excluding blockchain and cryptocurrency firms.
“The measure does not make any sense in that those firms are registered in compliance with the Act on Reporting and Using Specified Financial Transaction Information,” the Korea Society of Fintech Blockchain pointed out, continuing, “Those firms may become parts of a key industry of South Korea in the future and the government is overlooking the chance.”
