South Korea’s Jeonbuk Bank has become the country’s first commercial lender to issue Korean won loans backed by Bitcoin, opening a new channel for corporate customers to secure business operating funds using digital asset holdings as collateral. According to a report by local news outlet Edaily, the service launched on a limited basis following structural developments under existing South Korean financial and digital asset regulations. Pledged Bitcoin will be held through registered third-party digital asset custodians, ensuring the bank provides fiat financing without taking direct ownership or physical control of the pledged cryptocurrency.
To establish the offering, Jeonbuk Bank developed its own proprietary digital asset valuation framework, marking a first for the South Korean banking sector. The system calculates collateral value using a weighted price index compiled from multiple global cryptocurrency exchanges alongside median market volatility measures to minimize price distortions from single platforms. The lender selected Bitcoin due to its leading market capitalization, high trading liquidity, and reliable benchmarking capabilities, supported by internal stress testing that confirmed the asset’s viability as collateral even during severe market downturns.
The product’s launch aligns with revised South Korean civil enforcement rules that took effect on October 1, establishing legal frameworks for court-supervised attachment and liquidation of virtual assets. Under these procedures, if a borrower defaults on a loan, Jeonbuk Bank can recover outstanding funds through a court-ordered sale of the pledged Bitcoin without directly handling the cryptocurrency. All participating custody providers must be registered Virtual Asset Service Providers (VASPs) compliant with local information security certifications, Travel Rule obligations, cold wallet storage mandates, and asset segregation rules under the Virtual Asset User Protection Act.
The initiative represents the initial commercial rollout of a broader strategy led by Jeonbuk Bank President Park Chun-won to position the regional institution as a crypto-focused financial platform. Building on its experience as the only regional lender offering real-name deposit and withdrawal accounts for South Korean cryptocurrency exchanges, the bank’s dedicated digital asset team is currently developing technical proofs-of-concept for payments, remittances, stablecoins, and an integrated interface combining traditional bank accounts with digital asset wallets. While specific details regarding loan-to-value ratios, interest rates, and initial custody partners remain undisclosed, Jeonbuk Bank plans to review expanding its digital asset collateral options as regulations and market demand continue to evolve.
