A High Court in Seoul, South Korea, has ruled on a case stating that Bitcoin is not money and should not be treated with the same laws that have been instituted for fiat. The ruling came as a result of a case filed by a disgruntled company that entered into a loan deal with another company using Bitcoin instead of fiat.
According to the report, Company A (as identified because the names of the two firms were withheld) signed a deal with Company B in October 2020 to give 30 Bitcoins to Company B in an agreement to pay after three months. The company agreed to the terms that it would pay Company A 1.5 Bitcoins in the first and second months, respectively, and 0.5 Bitcoins in the third month, after which the entire loan would have been paid off.
At the end of the agreed period, Company B neither paid off its loan nor the interest it had accrued, which led Company A to extend the loan period till April 2021 and also change the interest rate to 0.246 per month.
Despite the extension, Company B still couldn’t meet up and it also filed a lawsuit against Company A, stating in court that Company A violated the Interest Limitation Act and the Loan Business Act of South Korea. According to the law, a lender cannot increase the interest rate on a loan deal it enters into with a borrower by fiat.
Citing this law, the court ruled in favor of Company A, stating that Company B entered into an agreement with Company A using cryptocurrency, which is not recognized as money in South Korea. The court insisted that the law Company B referred to only applies to fiat, and Bitcoin is not fiat or money.
The Judge ruled that Company B is obliged to pay the loan and interest based on the newly adjusted figures set by Company A. This leaves Company B with two options – to either accept the ruling or appeal to the Supreme Court.
Legal tender, Crypto, and South Korea
So far, only two countries have declared Bitcoin legal tender – El Salvador and the Central African Republic. Other countries have either completely banned cryptocurrencies or are neutral about them, with the majority warning their citizens of the risks involved in the use of cryptocurrencies.
While the final decision on how to resolve the matter between the mentioned firms remains open, it’s worth noting that South Korea has laws that govern the crypto market in the country.