South Korean Court: Bitcoin is Not Considered as Money

South Korean Court: Bitcoin is Not Considered as Money

In a recent decision, the Seoul High Court confirmed that Bitcoin and other cryptocurrencies do not fall under interest rate limitations. The court determined that cryptocurrencies are assets, not legal tender, which exempts them from traditional financial regulations.

The case involved two unnamed companies, referred to as Company A (a cryptocurrency fintech firm) and Company B. In October 2020, Company A loaned 30 Bitcoins to Company B for a three-month period, with an agreement that Company B would repay the loan along with interest rates of 5% for the first two months and 2.5% for the third month, paid in Bitcoin.

However, Company B failed to meet the agreed-upon repayment schedule, leading to an extension of the loan period and a change in the interest rate to an annual rate of 10%.

Despite these adjustments, Company B did not repay the loan as agreed, which prompted Company A to file a lawsuit.

In defense, Company B argued that Company A had violated the Interest Limitation Act and the Loan Business Act. They claimed that the monthly interest rates exceeded the legal cap of 24%, translating to annual rates of 60% and 30% respectively.

The Seoul High Court rejected Company B’s claims, stating that the contract was based on virtual assets, not money. As a result, it concluded that the Interest Limitation Act and the Loan Business Act did not apply.

The court ruled that Company B must return the Bitcoins according to the agreed-upon interest rate. This decision reaffirms the South Korean court’s view that cryptocurrencies are assets, not legal tender.

Compiled by Coinbold