[Economy Pulse] The First Requirement for a Startup Nation Is Trust in the Government

The government recently launched the "Entrepreneurship for All" project, delivering the message that "anyone can start a business with just an idea." This bold initiative offers up to KRW 1 billion in business development and investment support. In an era marked by rising youth unemployment, growing inequality, and artificial intelligence rapidly transforming industries and jobs, the government’s direction to encourage more citizens to become entrepreneurs is commendable. Although there was significant criticism over the leaked applicant information during the selection process, the policy effort to build a startup nation deserves recognition, regardless of this incident.

However, a single selection event and a one-time grant are not enough to build a startup nation. The reason why talent and capital from all over the world flock to Silicon Valley is not because of abundant government grants. It is because successful cases of entrepreneurship dramatically changing the world and generating significant wealth continually occur, and these successes lead to new startups and further investment. As more people experience life-changing entrepreneurial success, outstanding talent will choose startups over medical schools or large corporations. What creates a startup nation is not handouts, but societal belief that one can succeed through entrepreneurship.

The first condition for this belief is trust in the government. Entrepreneurship is not something one attempts lightly. It is a challenging journey marked by sleepless nights, taking on investors’ funds and facing family concerns during the most critical time of one’s life, with no guarantee of success. Entrepreneurs are already taking on the immense uncertainty of the market. If, on top of that, they must worry about sudden changes to government policies or whether announced schedules will actually be kept, who would dare to launch a startup? What founders fear is not strict regulation, but the government failing to honor its commitments. Even strict regulations are manageable when standards and timelines are clear, as founders can then decide whether to invest, wait, or withdraw. But if government promises are repeatedly postponed, companies are left incurring costs without being able to make any strategic choices.

One representative example is tokenized securities. In February 2023, the Financial Services Commission issued tokenized securities guidelines, which the market interpreted as the start of official institutionalization. Companies hired talent, developed platforms, and attracted investment. However, the relevant legislation only passed the National Assembly about three years later, with implementation scheduled for another year after that. During this waiting period, some of the first-generation fractional investment startups that pioneered the market under the regulatory sandbox exited the business or entered liquidation procedures. While not all failures can be blamed on the government—there were likely also limitations in business performance and capital strength—it is difficult to deny that, having promised to open a path, the government failed to build the bridge to formal institutionalization in a timely manner, resulting in early pioneers dropping out. If instances of entrepreneurs starting businesses based on government announcements but then having to leave the market while awaiting regulatory implementation continue to repeat, talented individuals will increasingly choose stable career paths such as medical schools or large corporations over startups.

The same is true in the digital asset sector. In the last presidential election, promises were made to permit spot Bitcoin ETFs, allow corporations to trade virtual assets, and institutionalize won-based stablecoins. The Financial Services Commission also announced phased permission of corporate trading and promoted the Digital Asset Basic Act. Yet, even a year after the new administration took office, there have been few tangible changes for companies. Corporate participation has been limited to certain asset sales, and clear implementation schedules for spot ETFs and won-based stablecoins remain elusive. The Digital Asset Basic Act, initially promised to pass the National Assembly in the first quarter of this year, has yet to be formally submitted due to controversies surrounding shareholding restrictions for exchanges. While the Financial Services Commission and the Bank of Korea have been reviewing the matter for several years, some companies have liquidated their entities, and others have begun seeking opportunities abroad. The remaining firms are struggling to pay monthly rent and wages, anxiously awaiting policy decisions.

Meanwhile, the United States is already preparing the next market. Dollar stablecoins, now amounting to USD 320 billion, are being brought into regulatory compliance through the "One Big Beautiful Bill Act," further strengthening the dollar’s global influence. At the same time, while it has taken Korea nearly four years to discuss institutionalizing tokenized irregular securities, the Depository Trust Company (DTC), under the DTCC, which is the core securities infrastructure of the United States, is scheduled to officially launch tokenization services for Russell 1000 stocks, major ETFs, and U.S. Treasury securities this October. This goes beyond art and real estate, aiming to put America’s key capital market assets on the blockchain and distribute them globally. This is not simply a matter of technical difference; it demonstrates that the U.S. government is faster in drawing conclusions and executing them. While Korea is debating the first stage of institutionalization, the U.S. is already setting the standards for the next market. Over time, this difference in speed is likely to lead to widening gaps in technology, capital, and talent.

What entrepreneurs want is not more handouts, but confidence that the official government-announced roadmaps will be followed. Policy delays are not bureaucratic inconveniences for entrepreneurs—they are matters of corporate survival. Policy is completed through implementation, not announcements. If the pattern of starting a business in reliance on government commitments but having to shut down before institutionalization continues, then no matter how much grant money is distributed, top talent will not choose entrepreneurship. The primary condition for a startup nation is not more support, but trust that the government will keep its promises.

Seo Byungyoon, Co-CEO of DSRV Labs

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