Jeonbuk Bank, a subsidiary of JB Financial Group, has become the first bank in South Korea to offer won-denominated loans backed by bitcoin as collateral.
The product is currently limited to corporate customers raising working capital, with bitcoin as the only eligible collateral type. The bank indicated it may expand the service depending on regulatory changes and market demand.
Collateral Management Structure
Rather than holding the bitcoin directly, Jeonbuk Bank uses a specialized custodian registered under Korea's Act on the Reporting of Specific Financial Information to hold the collateral. In the event of borrower default, the bank does not take possession of the coins but instead liquidates them through enforcement procedures such as court-ordered sales to recover loan proceeds.
To value the collateral, the bank uses an index based on weighted average prices across multiple global exchanges.
Selection Rationale
Jeonbuk Bank chose bitcoin for its market capitalization and trading volume, which are the largest among digital assets. The bank conducted stress tests demonstrating that bitcoin performed as collateral even during sharp price declines.
Broader Context
Similar products already operate internationally. JPMorgan Chase launched bitcoin-backed loans for institutional clients in March, and Switzerland's Sygnum Bank offers comparable credit products.
The loan represents the first concrete result of the "Crypto Bank" vision promoted by Jeonbuk Bank President Park Chun-won. The lender is the only regional bank providing real-name verified accounts to crypto exchanges and is preparing an "all-in-one wallet" combining fiat accounts and digital asset wallets.
Jeong Sang-hoon, executive vice president of the bank's digital division, stated: "This loan is an example of designing a risk management and recovery structure that allows us to utilize existing bank lending and collateral management systems without directly holding virtual assets."
