South Korea's Jeonbuk Bank announced on October 12, 2026, the launch of the country's first loan program enabling corporate clients to borrow Korean won using Bitcoin as collateral. The initiative represents a step toward CEO Park Choon-won's vision of developing a "crypto bank."
The program is initially limited to registered corporate customers and accepts only Bitcoin as collateral. Borrowers may use the funds for business operations, including payroll, supplier payments, and other operating expenses. Individual customers and retail use cases, including cryptocurrency speculation, are excluded from the program.
Program Structure and Collateral Management
Jeonbuk Bank selected Bitcoin due to its largest market capitalization and trading volume among cryptocurrencies. The bank tested Bitcoin's performance as collateral during sharp price declines before launching the program.
The bank will not directly hold or manage pledged Bitcoin. Instead, approved custody providers that meet South Korea's security requirements will hold the assets. These providers must maintain Information Security Management System (ISMS) certification and comply with the Virtual Asset User Protection Act.
Bitcoin collateral value will be calculated using a weighted average price from multiple global exchanges, designed to reduce the impact of significant price swings on individual trading platforms.
Default and Collateral Sale Procedures
Under South Korea's revised Civil Execution Rules, which took effect on October 1, 2026, the bank cannot automatically liquidate Bitcoin collateral in case of loan default. Instead, the bank must obtain a court order to sell the collateral through a public auction and recover outstanding debt, adding an additional layer of regulatory oversight.
Jeonbuk Bank Vice President of the Digital Division Jeong Sang-hoon stated, "We will continue to enhance our digital asset financial capabilities in line with future changes in relevant laws and regulations." The bank plans to consider expansion of the program based on regulatory changes and market demand.
Global Context
Bitcoin-backed lending services are not unique to South Korea. JPMorgan Chase and Swiss bank Sygnum have also introduced similar lending programs, reflecting growing institutional interest in using digital assets as collateral.
