Jeonbuk Bank Offers South Korea's First Bitcoin-Backed Loans

South Korea’s Jeonbuk Bank has introduced the country’s first bank-issued won loans backed by Bitcoin ($BTC), allowing corporate customers to use their cryptocurrency holdings as collateral for business financing. According to CryptoNews, the lender—a subsidiary of JB Financial Group—has started offering the service on a limited basis for corporate borrowers seeking operating funds.

Third-Party Custody and Valuation

The bank accepts Bitcoin as collateral through registered digital asset providers without taking direct ownership or control of the pledged cryptocurrency. Only virtual asset service providers registered under South Korea’s financial transaction reporting legislation are eligible to hold the pledged assets, complying with Travel Rule obligations and the Virtual Asset User Protection Act.

To assess collateral, Jeonbuk Bank developed a proprietary valuation system. The framework uses a weighted index of prices from multiple global exchanges alongside a median measure of market volatility to calculate collateral values and manage risk during price declines.

Legal Enforcement Rules

New enforcement rules effective October 1 allow the bank to recover unpaid loans through court-ordered sales of Bitcoin collateral. If a borrower defaults, the institution can seek recovery through a court-supervised process to liquidate the pledged cryptocurrency and settle the outstanding balance.

Key facts

• Jeonbuk Bank launched South Korea's first bank-issued won loans backed by Bitcoin.
• The service is initially limited to corporate customers seeking business operating funds.
• Pledged Bitcoin is held by registered third-party digital asset custodians.
• New civil enforcement rules effective October 1 enable court-ordered sales of collateral upon default.