Bitcoin Exempted From Interest Rate: South Korean Court Rules Crypto ‘Is Not Money’

Bitcoin (BTC) obtained a big authorized judgment from the Seoul Excessive Courtroom Civil Division, which has concluded that it shouldn’t be labeled as cash.

This pivotal ruling exempts the main cryptocurrency from adhering to the lending enterprise laws in South Korea, and it successfully declares that the customary guidelines governing rates of interest are usually not relevant to BTC. 

This resolution, as reported by a translation of a local news article from Hangkyung, affirms that the present legal guidelines regarding curiosity restrictions and mortgage companies don’t prolong their jurisdiction to cryptocurrencies.

Case Background And Dispute

In a latest legal case in South Korea, the Seoul Excessive Courtroom Civil Division made a noteworthy resolution relating to the standing of Bitcoin and its remedy beneath lending laws. The specifics of the case weren’t disclosed resulting from authorized causes, with the concerned events being known as Firm A and Firm B.

In accordance with the courtroom proceedings, Firm A entered into an settlement with Firm B in October 2020, whereby the previous would lend 30 BTC to the latter for a period of three months. The phrases of the settlement stipulated an rate of interest of 1.5 BTC for the primary two months and 0.75 BTC for the ultimate month.

Bitcoin loses a number of hundred and now at $30,250. Chart: TradingView.com

Nonetheless, Firm B failed to meet its obligations beneath the preliminary phrases, resulting in an extension of the contract till April 2021. As a part of the extension, the curiosity situation was revised, and Firm A would now obtain 0.246 BTC per 30 days, equal to an annual rate of interest of 10%.

Subsequently, Firm B initiated a lawsuit in opposition to Firm A, alleging that the rate of interest adjustments violated the Curiosity Limitation Act and the Mortgage Enterprise Act. The defendant argued that Firm A was in violation of those legal guidelines by altering the agreed-upon charges.

Courtroom Ruling On Bitcoin’s Applicability Of Lending Legal guidelines

In response to the arguments offered, the courtroom dismissed Firm B’s claims. The courtroom explicitly said that the contract in query concerned digital belongings, particularly Bitcoin, slightly than conventional forex. Due to this fact, the courtroom concluded that the laws outlined within the Interest Limitation Act and the Loan Business Act weren’t relevant to this specific case.

Furthermore, the courtroom officers went a step additional by asserting that “the item of this contract is digital belongings, not cash, so the curiosity restriction regulation and the mortgage enterprise regulation don’t apply.” In essence, which means it’s not possible to im pose rate of interest limitations when lending Bitcoin, as per the present authorized framework within the nation.

In accordance with the authorized system of South Korea, events concerned in a case have the chance to problem a verdict twice, permitting Firm B the choice to doubtlessly contest the ruling on the nation’s highest judicial physique, the Supreme Courtroom.

Featured picture from Reuters