Jeonbuk Bank Launches South Korea’s First Bitcoin-Backed Won Loans As Global Banks Embrace Crypto Collateral
In Brief
Jeonbuk Bank becomes South Korea’s first bank to offer Bitcoin-backed won loans to corporate clients, using regulated custodians and new enforcement rules to manage crypto collateral without direct custody.
Jeonbuk Bank, a subsidiary of JB Financial Group, has become the first bank in South Korea to offer won-denominated loans secured by digital assets. The service, launched in October 2026, is currently available on a limited basis to corporate customers seeking working capital, with Bitcoin as the sole accepted form of collateral. The bank plans to evaluate expanding eligible assets and loan purposes based on regulatory developments and market demand.
The product is structured so that the bank never takes ownership of or direct control over the pledged cryptocurrency. Bitcoin is 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.
Jeonbuk Bank selected Bitcoin after conducting internal stress tests that verified its suitability as collateral even during sharp price declines, citing its market capitalization, trading volume, price discovery, and liquidity as key factors. The bank also developed the banking sector’s first dedicated valuation framework for digital assets, using a weighted average index of prices from multiple global exchanges combined with a median of market volatility indicators. This approach reduces distortions that could arise from relying on a single exchange and enhances external credibility through publicly disclosed calculation methods.
Recovery Framework and Broader Digital Asset Strategy
The lending model relies 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; instead, collateral is 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.
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” integrating 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.
Disclaimer
In line with the Trust Project guidelines, please note that the information provided on this page is not intended to be and should not be interpreted as legal, tax, investment, financial, or any other form of advice. It is important to only invest what you can afford to lose and to seek independent financial advice if you have any doubts. For further information, we suggest referring to the terms and conditions as well as the help and support pages provided by the issuer or advertiser. MetaversePost is committed to accurate, unbiased reporting, but market conditions are subject to change without notice.
About The Author
Alisa, a dedicated journalist at the MPost, specializes in crypto, AI, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
More articles
Alisa, a dedicated journalist at the MPost, specializes in crypto, AI, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
