Im Chae-yul, Chairman of the On-Chain Finance Association, "Regulations Blocking Institutional Investor Participation Must Be Eased"

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[Asia Economy Reporter Song Seung-seop] On the 16th, Lim Chae-yul, chairman of the Online Investment-Linked Finance Association, held a press conference at the Irum Center in Yeongdeungpo-gu, Seoul, stating, "The most urgent regulatory relaxation is to allow existing financial companies to invest in the online investment-linked finance industry."

The press conference was held to mark the first anniversary of the association's establishment. On this day, Chairman Lim emphasized repeatedly, "The regulatory relaxation by supervisory authorities can not only revitalize and sustain the online investment-linked finance industry but also promote the expansion of mid-interest loans, which can bring interest rate reduction effects to financial consumers," adding, "Prompt regulatory relaxation is necessary." He continued, "According to the current Online Investment-Linked Finance Act, linked investment is allowed up to 40% of the募集 amount per product," but argued, "We need to change the reality where institutional investors cannot actually invest due to loan regulations by industry, such as the requirement to conduct credit screening when lending."

The difficulty of institutional investment mentioned by Chairman Lim arises from differing regulations among financial sectors. The Online Investment-Linked Finance Act permits linked investments from other financial institutions but defines them as loans and credit extensions. Banks and secondary financial institutions must go through credit screening procedures to provide loans under current laws. However, the Online Investment-Linked Finance Act explicitly states that personal credit information necessary for credit screening cannot be provided to other financial institutions.

As a result, voices from the online investment-linked finance industry have grown louder, stating that the industry's growth is delayed because institutional investors cannot participate. Individual investors have weaker financial power than institutional investors. The industry also misses out on promotional and indirect protection effects that can be gained through institutional investor participation. In advanced markets where the online investment-linked finance industry is well-developed, such as the United States and the United Kingdom, existing financial companies and institutional investors lead the market. Chairman Lim demanded, "Regulations should be relaxed in proportion to the increased investment stability, such as expanding the investment limits for individual investors."

Regarding the large and small financial accidents and negative perceptions centered on P2P financial companies, he explained, "We have been striving for compliance management and user protection over the past year." This means that legal and institutional measures have been established, such as segregated custody of investment funds through deposit institutions and the operation of a central record manager who intensively manages transaction information. The association's strengthening of management information disclosure by member companies and the implementation of compliance management monitoring and regular inspections with financial supervisory authorities were also cited as achievements.

Statistics for the past year were also announced. The number of registered member companies increased from the initial three (8Percent, Lendit, PeopleFund) to 48. Currently, the total new loan volume of all member companies has increased to 2.33 trillion KRW. The loan balance reached 1.4027 trillion KRW. The average loan interest rate of member companies was 10.7%, which was lower than the loan interest rates of savings banks and specialized credit finance companies (in the 13% range).

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