FSC: Gains and Losses from Infrastructure Fund Investments Can Be Excluded from Current Profit and Loss

Discussion on Accounting Challenges for Long-term and Venture Investments
Reviewing Recognition of SAFE Issuance as "Equity"

Financial authorities will revise accounting standards to allow gains and losses from investments in perpetual closed-end infrastructure funds to be excluded from current profit and loss, in order to shift finance concentrated in real estate toward more productive sectors. In addition, they are considering relaxing the fair value assessment principles for unlisted stocks to promote venture investment.

The Financial Services Commission announced on the afternoon of August 12, 2025, that it held a roundtable at the Seoul Government Complex to listen to accounting challenges related to expanding productive finance and long-term and venture investment, and discussed these measures.

This roundtable was organized as a follow-up to the meeting of financial association heads chaired by the Vice Chairman of the FSC on July 28. At that time, the FSC stated, "We will comprehensively review and boldly reform laws, systems, regulations, accounting, and supervisory practices that hinder financial companies from proactively and responsibly engaging in productive investment."

First, gains and losses from investments in perpetual closed-end (non-redeemable) infrastructure funds will be allowed to be excluded from current profit and loss. As a result, volatility in investors' financial statements will be significantly reduced even in long-term investments sensitive to interest rate or economic fluctuations, which is expected to increase incentives for long-term investment in the financial sector.

Discussions were also held on promoting venture investment. The venture industry requested that the accounting standard for the issuance of Simple Agreement for Future Equity (SAFE) be changed from being recognized as "debt" to being recognized as "equity." This is because, if treated as debt, the liabilities of companies receiving investment via the SAFE method increase.

The FSC stated, "We will comprehensively review accounting issues with relevant agencies, including challenges faced in the field and areas of accounting uncertainty," adding, "We plan to improve and supplement accounting standards and guidelines to better reflect economic substance, as long as accounting transparency is not compromised."

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