On October 31, 2019, the National Assembly of Korea passed a new law, specifically focused on peer-to-peer ("P2P”) or marketplace lending.
The so-called "Act on Online Investment-Linked Financing" is the world's first legislation solely dedicated to P2P lending, and will go into effect in November 2019. Once effective, the law is expected to clarify legal grey areas for the practice of lending money to individuals or businesses through online services that match lenders to borrowers.
Among other requirements to receive a government-approved license, a minimum capital of KRW 500 million is required. Additionally, P2P lenders must draw a line between funds raised on P2P lending platforms and their working capital.
The new law represents the first finance-related law in Korea since the enactment of the Specialized Credit Financial Business Act in 2002.
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