# South Korea’s Ambitious Venture Policy Overlooks the Blockchain Industry

The South Korean government, led by Lee Jae-myung, has unveiled a bold plan to scale the country’s venture investment market to 40 trillion won annually. This ambitious initiative encompasses structural reforms designed to reshape South Korea’s startup ecosystem, such as allowing venture funds to target retirement pensions, creating a global venture fund-of-funds, launching Business Development Companies (BDCs), providing enhanced tax credits for corporate venture investments, and revitalizing the exit market for startups. Collectively, these measures aim to transform the nation into a competitive global hub for venture capital.

However, amidst this forward-looking framework, a glaring omission emerges: the blockchain and cryptocurrency sectors. Despite the global rise of Web3 and decentralized technologies, which are widely heralded as the backbone of the next internet revolution, the South Korean government’s venture roadmap lacks any substantial mention of these industries. Blockchain technology continues to be shackled by outdated speculative stigmas, rendering it invisible within institutional investment frameworks. This neglect underscores an apparent underestimation of a potentially transformative pillar of innovation.

# Are Retirement Investments and BDCs Enough? The Risks of Outdated Frameworks

Permitting retirement pension funds to invest in venture capital marks significant progress for South Korea, aligning it with global investment norms. Yet, realizing its full impact demands dismantling entrenched conservative practices that confine pension investments to conventional sectors. For example, in the United States, some pension funds actively prioritize Web3 and blockchain-specific venture projects, channeling capital into high-potential areas like artificial intelligence (AI) and decentralized technologies. In stark contrast, South Korea’s pension funds hesitate to even consider blockchain investments, foregoing lucrative opportunities in industries poised to define the future of the global economy.

The introduction of BDCs — a mechanism known for fueling the growth of startups — is another noteworthy reform. However, the implementation is limited. In markets like the U.S., BDCs actively fund startups, including blockchain tech companies, decentralized autonomous organizations (DAOs), and tokenized projects. Conversely, South Korea’s venture policies remain constrained by traditional corporate frameworks, effectively excluding DAOs or token-based projects from their investment purview. Even blockchain startups with legitimate corporate structures find themselves marginalized in South Korea's venture capital markets, often due to preconceived biases against cryptocurrency-related models. Such outdated regulatory barriers stifle blockchain innovation, discouraging investors and entrepreneurs alike.

# The Exit Market Bottleneck: A Stumbling Block for Blockchain Startups

A thriving venture capital ecosystem depends heavily on vibrant exit opportunities, such as initial public offerings (IPOs) and mergers and acquisitions (M&A). These exits enable investors to recover their capital, incentivizing continued investments into new ventures and sustaining the broader ecosystem. While the South Korean government has committed to expanding exit pathways through M&A incentives, the strategy remains largely unattainable for blockchain startups.

For blockchain enterprises, regulatory complexity and legal ambiguities present formidable barriers to pursuing IPOs. Similarly, the nascent domestic M&A market for these startups suffers from flawed valuation methods and innately skeptical financial scrutiny due to their crypto holdings. As a result, blockchain startups are forced into cyclical business struggles, grappling with limited options for exit strategies.

IPO-bound blockchain ventures face additional challenges post-listing. Because venture capital firms often liquidate tokens immediately after public offerings, the resulting supply glut triggers sharp price plunges. Retail investors typically bear the brunt of these losses in a volatile ecosystem. A number of prominent South Korean blockchain projects have already faced this reality, with token values halving post-IPO as venture backers seek liquidity. This pattern, far from coincidental or greed-driven, highlights the urgent need for a healthier and more diverse exit market.

# South Korea Risks Becoming a “No-Go Zone” for Global Capital

The government’s ambition to attract foreign investment through a global venture fund-of-funds is a commendable step forward. However, limitations tied to traditional equity-focused fund structures place blockchain startups and token-focused ventures at a disadvantage. Unless South Korea evolves its regulatory framework, embracing token-based assets and funds, it risks alienating global Web3 venture capitalists.

Across Asia, rival nations already outpace South Korea in adopting progressive policies that welcome blockchain and decentralized tech investment. In Japan, tokenized funds have been operational since 2023, with regulators crafting clear frameworks for growth. Hong Kong is experimenting with granting legal personality to DAOs, providing much-needed regulatory flexibility to decentralized innovators. Meanwhile, cities like Abu Dhabi, Dubai, and Singapore are setting benchmarks by launching regulatory sandboxes tailored to blockchain-based investment models, such as DAOs, tokenized funds, and real-world asset (RWA) tokenization.

Global capital flows to jurisdictions that embrace potential high-growth technologies while providing clarity and flexibility. If South Korea continues to sideline blockchain-focused industries, it risks branding itself as a "no-go zone" for global venture capital. With neighboring nations pulling ahead, South Korea could miss the window to establish itself as a competitive player in the Web3 investment ecosystem.

# A Call for Change: Blockchain Must Be Central to South Korea’s Venture Vision

The South Korean government proudly envisions the nation as one of the “top four global venture powerhouses,” an aspiration that underscores its drive for innovation. Yet, omitting blockchain from its venture narrative calls into question the completeness of this vision.

Globally, decentralized technologies, AI, and blockchain systems are propelling the next industrial revolution. South Korea’s leadership in this paradigm shift will not be determined merely by its technological capabilities or sheer volume of startups. Instead, its policy flexibility and willingness to adapt to new investment paradigms will define its standing.

To achieve its ambitious venture goals, South Korea must overcome antiquated perceptions and systemic blockers, integrating blockchain into the core of its policy infrastructure. Slashing outdated biases and supporting token-based and decentralized business models are essential steps toward thriving in the Web3 era. Without these shifts, South Korea risks relegating its status as a venture powerhouse to an unfulfilled aspiration, undercutting its 40 trillion-won initiative’s transformative potential.

# About Professor Hyejin Park

Professor Hyejin Park serves as a leading faculty member in AI and Digital Assets at Sogang University. She also heads the Master’s in Digital Assets and Blockchain program at Seoul School of Integrated Sciences & Technologies. As the CEO of Bayard, she develops cutting-edge solutions in blockchain, security, and AI while managing investments in the digital asset sector as Korea Head for Simsan Ventures LONDON. Through research, education, and investments, Professor Park is driving the sustainable evolution of blockchain innovation and crypto ecosystems on a global scale.