Jeonbuk Bank, a subsidiary of JB Financial Group, has become the first South Korean bank to launch won-denominated loans backed by Bitcoin, according to an October 12, 2026 report by Edaily. The service is currently limited to corporate borrowers seeking funds for business operations, with Bitcoin as the only accepted digital asset collateral.
The bank will not take direct ownership or control of pledged cryptocurrency. Instead, customers must hold Bitcoin with a registered digital asset custodian, and only virtual asset service providers registered under South Korea’s financial transaction reporting legislation are eligible. Those custodians must comply with information security management certification, Travel Rule obligations, customer asset segregation, cold wallet storage requirements, and insurance or reserve rules under the Virtual Asset User Protection Act.
Jeonbuk Bank developed its own digital asset valuation system using a weighted index of prices from multiple global exchanges and a median measure of market volatility. Internal stress tests examined collateral performance during substantial Bitcoin price declines, and the bank cited Bitcoin's liquidity, market size, and trading volume as reasons for its selection. High trading liquidity was also important because the lender would need to convert pledged assets into cash if a borrower failed to repay.
The product follows amendments to South Korea’s civil enforcement rules that took effect on October 1. If a borrower defaults, the bank can seek recovery through a court-ordered sale of the pledged cryptocurrency, with proceeds used to settle the outstanding loan without requiring the bank to receive Bitcoin directly. Jung Sang-hoon, vice president of Jeonbuk Bank’s digital division, described the product as applying existing bank lending and collateral management systems to digital assets without requiring direct ownership. The report did not disclose the interest rate, loan-to-value ratio, total lending volume, or the identity of the custody provider.
The move is part of a broader strategy by Jeonbuk Bank President Park Chun-won to develop the institution into a crypto-focused bank. The bank already provides real-name deposit and withdrawal accounts to cryptocurrency exchanges and has a dedicated blockchain and digital asset team examining payment, remittance, and stablecoin services. It is also working with external technology companies on an integrated wallet that would combine conventional bank accounts and digital asset wallets in a single interface.
Bitcoin-backed lending has been gaining traction globally. In March 2026, JPMorgan Chase began accepting Bitcoin as collateral for institutional clients through its Kinexys digital asset platform, covering Bitcoin and Ethereum with third-party custodians including Fidelity Digital Assets and Coinbase Custody. Jeonbuk Bank plans to use its initial operating experience to refine collateral monitoring, valuation, and recovery procedures and will consider expanding eligible assets and loan purposes as South Korea’s digital asset legislation evolves.
