What is the right to receive principal and interest, explained

What is the right to receive principal and interest?

The right to receive principal and interest (원리금수취권, wonrigeum-suchwigwon) is the legal right of an investor to collect the principal and interest of a loan. It is the form an investor’s claim takes under Korea’s Online Investment-Linked Finance Act (온투법, the law that governs peer-to-peer lending and investment in Korea).

The law defines it precisely. Article 2(4) describes the right to receive principal and interest payments as “a right that an investor acquires under an agreement that the investor shall receive the amount of a P2P loan recovered by an online investment-linked financial business entity in proportion to the amount of the P2P investment made for such P2P loan” (Act on Online Investment-Linked Financial Business and Protection of Users, KLRI English translation). Two things in that wording matter: the right arises under an agreement, and what it entitles you to is a proportional share of recovered cash flows — not the loan contract itself.

So when you invest in a peer-to-peer loan on a Korean platform, you do not become the original lender of record. Instead, you hold a defined legal right to receive the principal and interest as the borrower repays. That right is literally “the right to receive principal and interest.” It is the everyday unit that investors hold and trade in Korea’s online-investment-linked-finance market.

The right is anchored in a real underlying loan. The loan exists between the platform’s lending structure and the borrower; the right to receive principal and interest is the investor-side entitlement to that loan’s repayment stream. It is a claim on cash flows, not ownership of the borrower or of any physical collateral.

How is it different from a “loan receivable”?

They describe the same economic asset — the right to a loan’s principal and interest — but in two different registers of language. The right to receive principal and interest is the precise Korean legal term; “loan receivables” (대출채권) is the more general term used in on-chain design and institutional-facing contexts.

root64’s glossary draws the line deliberately, and we follow it consistently:

• The right to receive principal and interest is used when the context is the law itself — the Online Investment-Linked Finance Act, central record-keeping, and contract documents that must name the exact legal form of the right.
• Loan receivables is used when the context is the RWA on-chain design or general documents written for institutional investors — for example, when describing an asset unit held by a special-purpose company or an on-chain identifier.

The distinction is one of register, not of substance. The two terms point at the same underlying claim; which word we use signals which frame we are speaking in — the Korean statutory frame, or the general institutional and on-chain frame.

Term	English	Where it is used
Right to receive principal and interest	Right to receive principal and interest	The legal frame: Online Investment-Linked Finance Act, central record-keeping, contract documents naming the exact legal right (e.g. the “investment form” line of a term sheet)
Loan receivables	Loan receivables	The general frame: RWA on-chain design and documents written for institutional investors (e.g. an SPC’s asset unit, an on-chain receivable identifier)

Source: root64 glossary (8percent business terms).

So when a root64 document says a Korean SPC “holds loan receivables” and another says it “holds the right to receive principal and interest,” they are not describing two different things. They are describing one right, named for two different audiences.

For a global reader, the right to receive principal and interest is analogous to a loan participation in U.S. and English-law markets — a structure in which a participant takes on the economic interest in a loan (its cash flows) without the loan contract itself being transferred, so the original lender remains the lender of record and the participant is not a direct creditor of the borrower (Law Insider, “Loan Participation”). The analogy is useful for intuition, not an exact equivalence: the right to receive principal and interest is a distinct statutory creation under Korean law, with its own legal character and transfer rules described below.

Who can hold or receive it?

Not everyone. Under the Online Investment-Linked Finance Act, transfer of the right to receive principal and interest is restricted by statute. Article 34(1) sets the default rule that “No investor shall transfer his or her right to receive principal and interest payments,” then carves out a narrow exception: an investor may transfer the right to a professional investor or to “a person specified by Presidential Decree as a person who is aware of the possibility of a loss,” and a related provision requires that any such transfer be intermediated through the platform (Act on Online Investment-Linked Financial Business and Protection of Users, Art. 34, KLRI English translation). In other words: not freely tradable to the general public on a secondary market, only to qualified holders, and only through the platform. That transfer restriction is a built-in feature of the right, and it shapes how any structure built on top of it must work.

root64’s Korean SPC sits inside that restriction rather than around it. The SPC is a qualified assignee — it falls within the professional-investor and eligible-holder category the law allows. Because it qualifies, the SPC can acquire the right to receive principal and interest — it participates in the existing market for these rights as an eligible institutional holder, rather than receiving an asset that the law would not allow it to take.

There is also a national record-keeper. Under the Act, an online investment-linked finance entity submits user and transaction information to a central record-keeping institution (중앙기록관리기관), which keeps and manages that data and restricts third-party access. The institution designated for the P2P sector is the Korea Financial Telecommunications & Clearings Institute (금융결제원, KFTC), which Korea’s Financial Services Commission announced as the selected operator in a press release dated 21 October 2020, with operations beginning 1 May 2021 through the official portal p2pcenter.or.kr (FSC press release via korea.kr, 21 Oct 2020; ET News, 21 Oct 2020). Its statutory role is to record and manage the underlying investment and borrowing transaction information — and to administer per-investor and per-borrower limits — rather than to operate as a rights registry. (This is a different institution from Korea Securities Depository, which is the central record-keeper for the separate securities-based crowdfunding regime.) The practical point holds either way: a holding of the right to receive principal and interest is not just a private claim asserted on paper — its underlying transactions are recorded at a national infrastructure level, which makes the right verifiable rather than merely asserted.

Why does this matter for root64?

It matters because the right to receive principal and interest is the specific thing root64’s Korean SPC holds — it is the legal foundation the rest of the structure stands on. The SPC’s job is to hold the assets, and “the assets,” stated precisely, are these rights to receive principal and interest.

That has a few practical consequences worth being explicit about:

• The SPC can only hold the right because it is a qualified assignee, falling within the professional-investor category that Article 34 permits. Without it, the structure could not legally acquire the assets at all.
• The underlying transactions are recorded by the sector’s central record-keeping institution (KFTC), so the SPC’s holding is anchored to external, verifiable national infrastructure rather than to root64’s own books alone.
• “Loan receivables” and “the right to receive principal and interest” appearing in different root64 documents are the same asset described for different readers, not a discrepancy.

A planned Hong Kong tokenization tier would sit above this Korean foundation to serve global professional investors. That tier is not yet formed, and any token issuance through it is contingent on regulatory clearance — it is not live today. What is live is the layer described here: a Korean SPC holding the right to receive principal and interest as a qualified assignee, with national transaction records maintained underneath.