Key facts
- Jeonbuk Bank is reportedly the first commercial bank in South Korea to accept Bitcoin as collateral for won-denominated loans.
- The loans are intended for businesses seeking operational capital.
- A third-party custodian holds the Bitcoin collateral.
- Amendments to South Korea's Civil Enforcement Rules, effective Oct. 1, allow for the seizure and liquidation of virtual assets used as collateral.
- Jeonbuk Bank can recover outstanding loans through the sale of cryptocurrency collateral without directly taking possession of the assets.
Jeonbuk Bank, a subsidiary of JB Financial Group, has reportedly started issuing Bitcoin-backed loans to its corporate customers, according to local outlet EDaily. This development makes Jeonbuk Bank the first commercial bank in South Korea to accept Bitcoin (BTC) as collateral for loans denominated in South Korean won. The service is reportedly limited to businesses seeking operational capital, with a specialized custodian holding the cryptocurrency used as collateral.
The lending arrangement follows amendments to South Korea’s Civil Enforcement Rules that took effect on October 1. These rules, according to the Supreme Court, establish procedures for seizing and liquidating claims to virtual assets, allowing banks to recover funds through court-ordered sales in the event of a default.