South Korean lender Jeonbuk Bank began offering Bitcoin-backed loans on October 12, 2026, allowing corporate clients to borrow Korean won against BTC collateral, the first service of its kind in South Korea. According to a report by Edaily, the service initially targets registered business customers, with any expansion contingent on demand and regulatory developments. Approved external custodians will safeguard all Bitcoin pledged against the loans.

Service Limited to Corporate Borrowers

The launch marks a step toward Chief Executive Park Choon-won's stated ambition of building a "crypto bank." At the outset, only registered corporate customers may apply, and Bitcoin is the sole eligible form of collateral. Businesses can deploy the borrowed funds for payroll, supplier payments, and other operating expenses. Because the loans are secured by pledged Bitcoin, the structure gives companies a way to draw on the value of their digital asset holdings without selling them, with the collateral released once the debt is repaid.

Individual customers are excluded from the service, and borrowers are barred from using the proceeds for cryptocurrency speculation.

Jeonbuk Bank said it chose Bitcoin because it commands the largest market capitalization and trading volume among cryptocurrencies, adding that the bank tested performance as collateral during periods of sharp price declines.

Jeong Sang-hoon, the bank's vice president of the Digital Division, said the lender would strengthen its digital asset financial capabilities as laws and regulations change.

External Custodians to Safeguard Pledged Bitcoin

Jeonbuk Bank will not directly hold or manage the Bitcoin pledged by borrowers. Instead, approved custody providers will safeguard the assets under South Korean security and regulatory requirements. These providers must obtain Information Security Management System (ISMS) certification and comply with the Virtual Asset User Protection Act, South Korea's legal framework for protecting virtual asset users.

To value collateral, the bank will calculate weighted average prices drawn from multiple global exchanges, a method intended to reduce the influence of sharp price swings on any single platform.

Court Approval Needed to Liquidate Defaulted Collateral

The program also establishes procedures for recovering unpaid loans. If a business defaults, Jeonbuk Bank cannot immediately seize and sell the pledged Bitcoin. Under South Korea's revised Civil Execution Rules, which took effect on October 1, 2026 — less than two weeks before the loan service launched — the bank must first obtain a court order to sell the collateral through a public auction, with proceeds applied toward the outstanding debt.

Jeonbuk Bank, a subsidiary of JB Financial Group, plans to assess demand and regulatory developments before broadening the service. The launch places the lender alongside institutions such as JPMorgan Chase and Swiss bank Sygnum, which have also introduced Bitcoin-backed lending offerings. How corporate uptake develops, and how South Korea's virtual asset rules evolve, will help determine whether the bank extends the product beyond its initial corporate-only scope.