South Korea’s Jeonbuk Bank has introduced the country’s first bank issued won loans backed by Bitcoin, allowing corporate customers to use their cryptocurrency holdings as collateral for business financing.
Summary
- Jeonbuk Bank has become the first South Korean bank to introduce Bitcoin backed won loans, initially limiting the service to corporate customers seeking business operating funds.
- The bank will accept Bitcoin as collateral through registered digital asset custodians without taking direct ownership or control of the pledged cryptocurrency.
- New enforcement rules effective October 1 allow the bank to recover unpaid loans through court ordered sales of Bitcoin collateral.
- Jeonbuk Bank has developed its own digital asset valuation system using prices from multiple global exchanges and market volatility measures to assess collateral.
- The lender plans to review additional digital assets and lending services as regulations evolve, while developing payment, remittance and integrated wallet infrastructure.
According to an October 12 report by local news outlet Edaily, the lender, a subsidiary of JB Financial Group, has started offering the service on a limited basis, with Bitcoin currently the only digital asset accepted as collateral.
The loans are restricted to corporate borrowers seeking funds for business operations. Jeonbuk Bank plans to review possible changes to the service based on regulatory developments and customer demand.
Under the arrangement, customers pledge Bitcoin held by a specialist digital asset custodian, while the bank provides financing in Korean won without taking direct ownership or control of the cryptocurrency.
The bank has structured the product to operate under South Korea’s existing banking and digital asset rules, including newly introduced procedures for enforcing claims against cryptocurrency collateral.
Jeonbuk Bank uses third party custody for Bitcoin loans
Jeonbuk Bank selected Bitcoin after reviewing its liquidity, market size and suitability for collateral valuation.
The bank considered Bitcoin’s position as the largest cryptocurrency by market capitalization and trading volume, which it said provides more reliable market prices and benchmarks than those available for smaller digital assets.
Internal stress tests examined how the collateral would perform during periods of substantial Bitcoin price declines. According to the report, the results supported the bank’s assessment that Bitcoin could remain suitable collateral under stressed market conditions.
High trading liquidity was another factor, since the lender would need to convert pledged assets into cash if a borrower failed to repay a loan.
To calculate collateral values, Jeonbuk Bank developed its own digital asset pricing standards, which the report described as the first such framework established by a South Korean bank.
Its valuation system uses a weighted index of prices from multiple global cryptocurrency exchanges, alongside a median measure of market volatility.
The method is designed to reduce reliance on prices from any single exchange, where unusual trading activity or temporary market disruptions could affect valuations. The bank selected reference measures whose calculation methods and components are publicly available.
Custody arrangements are handled separately from the bank’s lending operations.
Only virtual asset service providers registered under South Korea’s financial transaction reporting legislation are eligible to hold the pledged Bitcoin.
Registered providers must comply with information security management certification requirements and Travel Rule obligations. Under the country’s Virtual Asset User Protection Act, they must maintain customer asset segregation, meet cold wallet storage requirements and carry insurance or establish reserves.
Jeonbuk Bank does not directly manage the wallets holding customer collateral.
New enforcement rules provide a route to recover Bitcoin collateral
The lending product follows amendments to South Korea’s civil enforcement rules that took effect on October 1.
The revised framework establishes procedures for attaching and liquidating claims involving the transfer of virtual assets, including the enforcement of security interests through court supervised processes.
If a borrower defaults, Jeonbuk Bank can seek recovery through a court ordered sale of the pledged cryptocurrency.
Proceeds from the sale would be used to settle the outstanding loan, without requiring the bank to receive the Bitcoin directly.
The arrangement was developed to keep the bank’s role within conventional lending and collateral recovery procedures while leaving cryptocurrency custody and asset handling to registered service providers.
Jeonbuk Bank’s digital division vice president, Jung Sang-hoon, described the product as an example of applying existing bank lending and collateral management systems to digital assets without requiring direct ownership of the underlying cryptocurrency.
He said the bank had designed its risk management and recovery procedures within the current legal framework and would continue developing its digital asset financial capabilities as regulations change.
The report did not disclose the interest rate, loan-to-value ratio, total lending volume or the identity of the custody provider.
Bitcoin backed lending gains ground among global banks
Jeonbuk Bank’s launch follows similar lending products introduced by financial institutions outside South Korea.
In March 2026, JPMorgan Chase began accepting Bitcoin as collateral for loans to institutional clients through its Kinexys digital asset platform, as crypto.news previously reported.
JPMorgan’s program covers Bitcoin and Ethereum, with pledged assets held by third party custodians, including Fidelity Digital Assets and Coinbase Custody. The bank uses collateral valuations and margin requirements to manage exposure to cryptocurrency price movements.
Swiss digital asset bank Sygnum has offered comparable cryptocurrency backed lending services.
Institutional financing providers have developed separate arrangements for customers seeking liquidity against digital assets.
In April, BitGo introduced an institutional financing platform that allows clients to borrow and lend against liquid, staked and locked cryptocurrency holdings through a single custody account.
The platform supports portfolio based collateral management, allowing eligible institutions to use different digital assets without moving them between multiple lending providers.
Jeonbuk Bank pursues digital asset banking services
The Bitcoin lending product is the first commercial result of Jeonbuk Bank President Park Chun-won’s strategy to develop the institution into a crypto focused bank.
Park has identified digital assets as an important part of future financial infrastructure and has directed the bank to build expertise in the sector as traditional financial institutions introduce cryptocurrency services.
Jeonbuk Bank has already developed experience providing real name deposit and withdrawal accounts to cryptocurrency exchanges, a service that the report said made it the only regional bank in South Korea offering such arrangements.
A dedicated team of blockchain and digital asset specialists has been examining payment systems, remittances and stablecoin services.
The bank has conducted technical proof of concept projects in these areas and is working with outside technology companies on an integrated wallet.
The proposed service would bring conventional bank accounts and digital asset wallets into a single user interface, allowing customers to access both services through one platform.
Other South Korean financial institutions have pursued related infrastructure projects.
In August, BitGo Korea secured registration from the country’s Financial Intelligence Unit, allowing it to develop regulated cryptocurrency custody and transfer services for institutional and corporate customers.
Hana Financial Group holds a 25% stake in BitGo Korea, while SK Telecom owns 10%.
In September, Hana Bank signed an agreement with Upbit Global to develop Travel Rule infrastructure for digital asset transfers.
The cooperation covers sender and recipient verification, secure transaction information sharing and technical connections between banks and registered cryptocurrency service providers.
Jeonbuk Bank plans to use its experience from the initial Bitcoin lending service to refine collateral monitoring, valuation and recovery procedures as South Korea continues work on digital asset legislation.
The lender will consider whether to expand eligible assets and loan purposes after reviewing its operating experience, market demand and future regulatory requirements.
