Jeonbuk Bank Launches South Korea’s First Bitcoin-Backed Won Loan for Corporate Clients

Jeonbuk Bank has launched South Korea’s first won-denominated loan backed by Bitcoin.

According to an Oct. 12 Edaily report, Jeonbuk Bank, a unit of JB Financial Group, recently began offering won loans linked to digital assets. The product is limited to corporate clients, with Bitcoin the only virtual asset accepted as collateral. Loan proceeds can be used only for corporate operating funds.

The bank does not directly hold the Bitcoin used as collateral. The pledged Bitcoin is managed by a specialized digital-asset custodian, while Jeonbuk Bank neither operates a separate wallet nor takes ownership of the asset. Bitcoin was chosen first because its trading volume and liquidity exceed those of other virtual assets, making collateral valuation and liquidation relatively easier.

Loan recovery also follows legal procedures. Under revised civil enforcement rules that took effect on Oct. 1, a default would lead to a court sale order or similar process to convert the collateral Bitcoin into cash. The bank does not take possession of the virtual asset directly, instead recovering its claim from the sale proceeds.

Collateral valuation incorporates prices from multiple global exchanges as well as market volatility indicators. The measure is designed to reduce the impact of sharp price swings at any single exchange on collateral assessments. Custody services are handled by a business operator registered under relevant laws, and statutory requirements including segregated storage of client assets and cold-wallet custody also apply.

Jeonbuk Bank has been expanding its digital-asset business, including by providing real-name verified deposit and withdrawal accounts to virtual-asset exchanges. Beginning with the Bitcoin-backed loan, it plans to review whether to expand eligible borrowers and related services based on regulatory changes and market demand.