Jeonbuk Bank Breaks Ground With Bitcoin-Backed Lending

South Korea's Jeonbuk Bank, a subsidiary of JB Financial Group, has launched the country's first bank-issued won loans backed by Bitcoin collateral, according to an October 12 report by local financial outlet Edaily. The service is restricted to corporate borrowers seeking operating funds, with Bitcoin as the only accepted digital asset at launch.

Jeonbuk Bank Builds Proprietary Bitcoin Valuation Framework

The bank selected Bitcoin after evaluating its liquidity, market size and suitability for collateral pricing. Internal stress tests examined how pledged assets would perform during periods of significant price declines, and the results supported Bitcoin's viability as collateral under stressed conditions, according to the Edaily report.Jeonbuk Bank developed its own digital asset pricing standards, which the report described as the first such framework established by a South Korean bank. The valuation system draws on a weighted index of prices from multiple global cryptocurrency exchanges alongside a median measure of market volatility, reducing reliance on any single trading venue where unusual activity could skew collateral values.Customers pledge Bitcoin held by a specialist digital asset custodian registered under South Korea's financial transaction reporting legislation. The bank does not take direct ownership or control of the pledged cryptocurrency. Only virtual asset service providers that comply with information security management certification, Travel Rule obligations and customer asset segregation requirements under the country's Virtual Asset User Protection Act are eligible to hold pledged assets.The report did not disclose the interest rate, loan-to-value ratio, total lending volume or the identity of the custody provider.

New Enforcement Rules Let Courts Liquidate Bitcoin Collateral

The product follows amendments to South Korea's civil enforcement rules that took effect on October 1, establishing procedures for attaching and liquidating claims involving the transfer of virtual assets through court-supervised processes. If a borrower defaults, Jeonbuk Bank can pursue recovery through a court-ordered sale of the pledged cryptocurrency without needing to receive the Bitcoin directly. Jeonbuk Bank's digital division Executive vice president, Jung Sang-hoon, described the product as an application of existing bank lending and collateral management systems to digital assets, Edaily reported. He noted the bank had designed its risk management and recovery procedures within the current legal framework and plans to continue building its digital asset financial capabilities as regulations evolve.

Global Banks Accelerate Bitcoin-Backed Lending

The launch places Jeonbuk Bank alongside major global institutions that have entered Bitcoin-backed lending. In March 2026, JPMorgan Chase began accepting Bitcoin as collateral for institutional loans, according to Edaily's reporting.Jeonbuk Bank's approach differs from most global peers in one respect: it serves corporate borrowers through a regional bank structure rather than through an institutional prime brokerage channel. The bank has already built experience providing real-name deposit and withdrawal accounts to cryptocurrency exchanges, a service Edaily described as unique among South Korean regional banks.

Broader South Korean Infrastructure Takes Shape

Related: In August, BitGo Korea secured registration from South Korea's Financial Intelligence Unit for regulated custody services. Hana Financial Group holds a 25% stake in BitGo Korea. Separately, Hana Bank signed an agreement with Upbit Global in September to develop Travel Rule infrastructure for digital asset transfers.Jeonbuk Bank plans to review whether to expand eligible digital assets and loan purposes after evaluating its operating experience, market demand and future regulatory requirements. The bank's dedicated blockchain team is also examining payment systems, remittances and stablecoin services, with an integrated wallet that would combine conventional bank accounts and digital asset wallets into a single interface.