- A South Korean court has ruled that cryptocurrencies are exempt from the country’s loan interest rate cap.
- The ruling was the result of an ongoing lawsuit involving a Bitcoin management company.
- The Court doesn’t consider cryptocurrencies as money.
Today, a court in South Korea ruled that cryptocurrencies like Ethereum, Bitcoin, and others can’t be considered as money. Therefore, the South Korean court claimed cryptocurrencies are exempted from the country’s interest rate cap for loans.
According to a report from Maeil Business News, a trial held in Seoul’s Central District Court last month sided in favor of Bitcoin management company A, which sued company B in civil court for Bitcoin that B owed. The parties engaged in the case were not identified by name.
Per the report, plaintiff A and defendant B entered into an arrangement in October 2020 in which A lent B 30 Bitcoins (valued at US$604,320 at the time of acquisition) with interest to be paid monthly over the next six months.
Company A filed a litigation after the indebted firm failed to repay the loan in cryptocurrency by the agreed-upon settlement deadline. The companies had settled on a 5% monthly interest rate, which works up to 60% per year.
However, B said that A broke two regulations that cap yearly loan interest at 24% (the Interest Limitation Act and the Act on Registration of Credit Business and Protection of Finance Users).
The court ruled that the arrangement between the businesses is not governed by existing legislation. The ruling states:
[The two acts] limit the highest rate of interest on money loans, but in this case, the subject of the agreement is Bitcoin, not money.
At the conclusion of the hearing, the judge ordered firm B to return the Bitcoin, or the equivalent amount of money converted, depending on the Bitcoin market price.
The hearing followed after the South Korean government took steps to establish a crypto regulatory framework. Furthermore, last week, South Korean authorities disclosed that, over the last two years, they had intercepted cryptocurrency payments totaling around $184 million from people suspected of tax evasion.
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