There are a lot of obstacles on the future road of the crypto space. Some prominent names consider the space a digital money bank, while some don’t even consider cryptocurrency money.
Today, a court in South Korea has made it clear that any legal interest limit that applies to traditional money loans does not apply to Ethereum, Bitcoin, or any other cryptocurrencies as they can’t be considered money.
Crypto Is Not ‘Money’
According to a local media report today, the 22nd Division of the Civil Settlement of the Seoul Central District Court, Deputy Chief Judge Chung Jae-hee, has claimed that crypto is not money.
However, the hearing came in favour of filings on 30 March when a Bitcoin managing firm A filed a lawsuit against firm B for not paying back Bitcoin loan. The original names of the firms were not revealed.
In October 2020, the two firms signed an agreement (virtual asset lending agreement) where firm A lent 30 bitcoins ($604K) to B within a six-month period to pay back the loan with monthly interest. Firm B agreed on an interest rate of 5% monthly, which is 60% annually.
However, firm B went into debt and failed to return the Bitcoin loan within the specified period, which legalised firm A to file a lawsuit against B.
In response to the filings, Firm B filed that A violated two laws. The first one is the Act on Registration of Credit Business and Protection of Finance Users, which restricts loans from exceeding a maximum annual interest rate of 24%, and the one is the Interest Limitation Act.
No Rules For Cryptocurrencies!
To the above court filings made by B, the Court said, “the Interest Limitation Act and the Loan Business Act limit the maximum interest rate on the loan of money and money, and since the subject of the contract in this case is Bitcoin, not money, the Interest Limitation Act and the Loan Business Act do not apply.”
The court ordered firm B to return the borrowed bitcoins to firm A or pay back the money after converting bitcoins to the market price at the end of the court hearing. However, the court kept the interest amount confidential that B is liable to pay.
The court’s hearing came up after South Korean regulators took steps to frame a crypto regulatory infrastructure in the country. Last month, local authorities lodged an arrest warrant against Terra chief and founder Do Kwon on LUNA’s investment security.
Therefore, the South Korean Central Authority is implementing the “Digital Asset Basic Act” with a motive to legalise and regulate cryptocurrencies for both security and non-security tokens.
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