Jeonbuk Bank, a subsidiary of JB Financial Group, has become South Korea's first bank to offer won-denominated loans collateralized by digital assets, Metaverse Post reported on October 12, 2026. The service went live in October 2026 and is available on a limited basis to corporate customers seeking working capital, with Bitcoin accepted as the sole form of collateral. The structure allows corporate borrowers to raise won liquidity while retaining ownership of the pledged Bitcoin rather than selling it. The bank said it will evaluate expanding eligible assets and loan purposes based on regulatory developments and market demand.

The product is structured so that Jeonbuk Bank never takes ownership of, or direct control over the pledged cryptocurrency. Pledged Bitcoin is instead held by specialized custodians — limited to virtual asset service providers registered under South Korea's Act on the Reporting of Specific Financial Information. Such providers are subject to Information Security Management System certification, Travel Rule compliance, and obligations under the Virtual Asset User Protection Act, including segregated custody, mandatory cold wallet storage ratios, and insurance or reserve requirements. By outsourcing wallet management to regulated custodians, the bank eliminates custody-related risks at the source while remaining within the existing legal framework.

Bitcoin was selected after internal stress tests verified its suitability as collateral even during sharp price declines, with the bank citing market capitalization, trading volume, price discovery, and liquidity as key factors. Jeonbuk Bank also developed the banking sector's first dedicated valuation framework for digital assets, combining a weighted average index of prices from multiple global exchanges with a median of market volatility indicators. This approach reduces distortions that could arise from reliance on a single exchange and enhances external credibility through publicly disclosed calculation methods.

Recovery Framework and Broader Digital Asset Strategy

The lending model rests on amendments to South Korea's Civil Enforcement Rules that took effect on October 1, 2026, which establish procedures for seizing, liquidating, and enforcing security interests over claims involving virtual assets. In the event of default, Jeonbuk Bank does not receive the Bitcoin directly; collateral is instead liquidated through court-ordered sales, with proceeds used to settle outstanding loan receivables. This design allows the bank to apply its conventional lending and collateral management systems to digital assets without holding the underlying cryptocurrency.

The launch follows a growing international trend. JPMorgan Chase began offering Bitcoin- and Ethereum-backed loans to institutional clients in March 2026 through its Kinexys platform, with pledged assets held by third-party custodians such as Fidelity Digital Assets and Coinbase Custody. Swiss digital asset bank Sygnum has also offered comparable credit facilities, while BitGo introduced an institutional financing platform in April enabling borrowing and lending against liquid, staked, and locked digital assets within a single custody account. Jeonbuk Bank's reliance on external, regulated custodians places its structure alongside the third-party custody arrangements underpinning JPMorgan's program.

For Jeonbuk Bank, the product represents the first tangible result of President Park Chun-won's "Crypto Bank" strategy, which positions digital assets as core components of next-generation financial infrastructure. The bank is the only regional South Korean lender issuing real-name verified accounts to virtual asset exchanges and operates a dedicated team conducting proof-of-concept tests on payments, remittances, and stablecoins. It is also developing an "all-in-one wallet" that integrates fiat accounts and digital asset wallets in a single interface, in collaboration with external technology firms.

The report did not disclose interest rates, loan-to-value ratios, lending volumes, or the identity of the custody provider — the parameters needed to gauge the product's scale and risk settings relative to comparable facilities already operating overseas.