Jeonbuk Bank issues South Korea's first bitcoin-backed bank loans

Jeonbuk Bank, a regional lender owned by JB Financial Group, has extended a corporate loan in won secured by bitcoin, the first loan of its kind from a South Korean bank. Local outlet Edaily first reported the loan on Oct. 12, and a bank spokesperson confirmed to Jaekyung Ilbo that a loan had been made while declining to name the borrower.

The bank has published no press release or filing on the product, and the date the loan was made has not been disclosed. Unchained noted on Oct. 12 that the confirmation came through the two Korean outlets rather than through any statement from the bank itself.

For now the product is open only to corporate customers, accepts only bitcoin as collateral, and limits the proceeds to business operating funds. CoinDesk wrote on Oct. 12 that the won-denominated loans are meant to cover operating costs rather than trading or investment.

The pledged bitcoin sits with a third-party custodian, and the bank takes neither ownership of it nor direct control over it. The custodian role is restricted to virtual asset service providers registered under Korean law, and Crypto Briefing reported on Oct. 11 that those custodians must hold ISMS security certification and comply with the Virtual Asset User Protection Act. The bank itself handles valuation and lending and does not manage the coins.

Pricing runs through the bank's own model. It values the collateral against a benchmark drawn from several global exchanges, factors in volatility medians, and stress-tested the setup against sharp price drops, the outlet wrote. Jeong Sang-hoon, executive vice president of the bank's digital division, told the outlet the loan was designed to use existing lending and collateral systems without the bank directly holding virtual assets.

If a borrower defaults, the bank does not take the bitcoin. It recovers its money by converting the collateral to cash through court enforcement, such as a sale order, and repays itself from the proceeds. That path depends on amended Civil Enforcement Rules from the Supreme Court of Korea, which took effect Oct. 1 and set procedures for seizing and selling rights tied to digital assets. The timing left less than two weeks between the new enforcement route and the product's arrival.

The commercial terms remain undisclosed. The loan-to-value ratio, the interest rate, and the size of the loan have not been made public, Unchained reported on Oct. 12. A bank spokesperson told that outlet the loan fell within the lending business allowed under the Banking Act and had not received a regulatory sandbox designation.

No Korean statute explicitly bars crypto as loan collateral. But a government crackdown in 2017 and 2018 included a ban on financial firms lending against virtual assets, which hardened into a de facto rule, the paper wrote. The bank's structure, with custody outsourced and recovery routed through the courts, keeps a clear line between lending money and holding crypto directly.

The loan is the first product of chief executive Park Chun-won's plan to turn Jeonbuk into a crypto bank, according to Edaily. Park signaled such lending earlier this year, and CoinDesk noted that the bank's chief had said it would roll out the country's first crypto-backed loan. Edaily pointed to JPMorgan Chase and Switzerland's Sygnum Bank as lenders already offering similar credit abroad, though the JPMorgan plan reported in June 2025 concerned crypto ETF shares as collateral rather than bitcoin held directly.

The bank picked bitcoin for its deep liquidity, which matters when collateral must be sold in a hurry. Only bitcoin qualifies for now. While designing the product, the bank reviewed loan-to-value ratios and margin-call thresholds for major tokens including bitcoin and ether, Jaekyung Ilbo reported, and it plans to weigh wider collateral and services based on demand and rule changes.