Cryptocurrency-backed loans will be available for the first time in South Korea

[Source: Delio]

Delio, a South Korean crypto-finance company, will launch a cryptocurrency lending service that will allow people to borrow money against their virtual assets like bitcoins as collateral for the first time in the country.

According to industry sources on Thursday, Delio will unveil its cryptocurrency-backed lending service this week with an initial total cap of $ 100 million. Users of the service, dubbed Blue, will be able to use their digital assets like bitcoin as collateral to take out loans at an annual interest rate of up to 16%, which is almost equivalent to that of a credit card loan.

Delio’s loan-to-value rate for its cryptocurrency loans is 50%, which means that a customer who deposits bitcoin worth 100 million won ($ 84,566.60) can borrow from money up to 50 million won.

Delio is a local cryptocurrency bank with a customer deposit of around 2,000 billion won of bitcoin. Its main service is staking under which customers who deposit bitcoin are eligible to receive additional bitcoin at a fixed rate of around 10% per year.

Its crypto-backed loan service is said to be the first of its kind in Korea. But because it allows its users to cash in their virtual coins without selling them, it could create a loophole in the country’s planned tax rule which imposes a 22% tax on crypto gains, starting next year. , critics warn. The tax is only imposed on capital gains over 2.5 million won after buying and selling cryptocurrencies.

According to financial authorities, there is no regulatory hurdle to launching cryptocurrency lending as it is not a peer-to-peer lending platform designed to connect people in need. credit with others willing to lend.

By Choi Geun-do and Minu Kim

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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