South Korea’s Jeonbuk Bank has reportedly begun offering Bitcoin-backed loans to corporate customers, allowing businesses to borrow Korean won against their cryptocurrency holdings. The lender, part of JB Financial Group, is described as the first commercial bank in the country to provide this type of financing.
Reports published on October 12 said the bank had already issued a loan, although it did not identify the borrower. Jeonbuk Bank has not disclosed the loan amount, interest rate or the share of Bitcoin’s value that customers can borrow.
Jeonbuk Bank Limits Bitcoin Loans to Corporate Customers
The new lending service is available only to companies seeking money for daily business operations. Bitcoin (BTC) is the sole accepted asset, and customers receive the loan in Korean won rather than cryptocurrency. The bank plans to review broader access if regulations and customer demand change.
The arrangement allows businesses to pledge Bitcoin without selling it before receiving financing. However, the bank has not released information about repayment periods, collateral requirements or the number of customers it expects to serve. The initial service remains limited to corporate lending. The bank has not named its custody partner or explained what additional collateral a borrower would need after a price decline.
Third-Party Custodians Hold the Bitcoin Collateral
Jeonbuk Bank does not take ownership or direct control of the pledged Bitcoin. Instead, a specialist digital asset custodian holds the cryptocurrency while the bank manages the loan. The bank restricts this role to virtual asset providers registered under South Korea’s financial reporting rules.
Those providers must meet security and reporting obligations, including customer asset separation and cold wallet storage requirements. They must also maintain insurance or reserves under the country's virtual asset protection law. These measures place responsibility for holding the Bitcoin with registered providers rather than the bank.
New Court Rules Set Out Loan Recovery Procedures
South Korea’s revised Civil Enforcement Rules took effect on October 1. The Supreme Court’s proposed amendments set out procedures for seizing and selling virtual assets and claims to their transfer. The changes provide a legal process for creditors seeking repayment when cryptocurrency forms part of a debtor’s assets.
If a borrower fails to repay, Jeonbuk Bank can seek a court-ordered sale of the pledged Bitcoin. The lender would then recover the outstanding debt from the cash proceeds without receiving the coins directly. Digital division executive Jung Sang-hoon said the product uses existing bank lending and collateral systems “without directly holding virtual assets.”
Jeonbuk Bank Develops Bitcoin Valuation Standards
The bank selected Bitcoin because of its large market size and trading liquidity. It also conducted stress tests to examine how sharp price declines could affect the collateral. Its valuation system combines prices from several global exchanges with market volatility measures rather than relying on a single trading venue. The bank uses benchmarks with published calculation methods and components to limit pricing differences between exchanges during periods of unusual trading activity.
Jeonbuk Bank has also been developing other digital asset services under President Park Chun-won’s “Crypto Bank” strategy. Work includes payment services, remittances and an integrated wallet linking bank accounts with digital assets. The lender will consider expanding eligible collateral and loan services as South Korea’s regulatory framework develops. No timeline for expansion has been announced.
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