Jeonbuk Bank has become the first South Korean bank to launch won-denominated loans collateralized by Bitcoin, marking a historic milestone in the country's digital asset adoption. The product, launched on January 12, uses Bitcoin as collateral while leveraging a professional custodian's management system without the bank directly holding virtual assets. According to financial industry sources, the lending is limited to corporate clients for business operating funds, with Bitcoin pledged as collateral held by a virtual asset service provider approved under the Act on Reporting and Using Specified Financial Transaction Information. A Jeonbuk Bank official confirmed to local outlet Jaekyung Ilbo that a loan has already been executed, though the borrower was not disclosed. This design fundamentally eliminates risks associated with virtual asset custody by having the bank not operate wallets directly, while the decision to limit eligible collateral to Bitcoin stems from market credibility given its largest market capitalization and trading volume among virtual assets.
The latest reports from Edaily indicate that Jeonbuk Bank has reportedly started offering Korean-won loans to corporate customers who pledge BTC USD for business operating funds, with the launch confirmed on October 12, 2026. However, rates, limits, and liquidation terms remain undisclosed for now, as reported by ALLINCRYPTO. The limited launch represents an institutional Bitcoin adoption signal, with corporate borrowers pledging BTC USD held by specialist custodians registered under South Korean financial transaction reporting rules. Bitcoin is currently the only eligible digital asset, and the bank has not disclosed the interest rate, loan-to-value ratio, or lending volume. The terms that would show how much financing companies can actually obtain remain unknown, though the structure allows businesses to use Bitcoin as collateral to access financing without selling their holdings.
The loan structure utilizes the revised Civil Execution Rules that took effect on January 1, enabling court-ordered sale procedures to liquidate Bitcoin and recover loan proceeds. Virtual asset custodians must be registered businesses fulfilling statutory obligations, obtaining Information Security Management System (ISMS) certification and complying with the Travel Rule. Under the Virtual Asset User Protection Act, custodians must segregate user assets, maintain cold wallet storage ratios, and carry insurance or reserves. Jeonbuk Bank has established dedicated digital asset valuation standards, adopting a weighted-average index of prices from multiple global exchanges and the median of market volatility indicators as its reference price to reduce price distortion impact. The bank explained that using publicly disclosed calculation formulas and composition enhances external credibility. The process draws on revised Civil Enforcement Rules that took effect October 1, which set out legal steps for seizing and selling rights tied to digital assets. If a borrower fails to repay, the bank would move to recover its money through court-ordered sale of the bitcoin, though the report doesn't specify the timeline for sales in volatile markets.
The Bank of Korea has announced plans to use wholesale central bank digital currency (CBDC) rather than private stablecoins as the settlement asset for a tokenized Treasury pilot scheduled for 2027. According to materials submitted to the National Assembly's Strategy and Finance Committee, the central bank will use digital currency issued directly by the BOK to reduce counterparty settlement risk and ensure settlement finality. Tokenized Treasuries involve issuing and distributing conventional government bonds as blockchain-based digital assets, allowing transfers of ownership and payment to be processed simultaneously and improving settlement efficiency. Preparations are underway with the BOK establishing an asset tokenization team within its Digital Currency Office in August and discussing implementation plans with the Ministry of Economy and Finance.
Jeonbuk Bank's Bitcoin-backed loan launch represents the first tangible result of CEO Park Choon-won's "crypto bank" vision, with Park viewing digital assets as a core component of next-generation financial infrastructure. The bank has been the only regional bank in South Korea to issue real-name verified deposit and withdrawal accounts to virtual asset exchanges, accumulating experience in digital asset financial infrastructure. Jeonbuk Bank operates a dedicated team of blockchain and digital asset specialists reviewing payment, settlement, remittance, and stablecoin businesses and conducting proof-of-concept testing. The bank is preparing to build an "all-in-one wallet" that integrates fiat currency accounts and digital asset wallets into a single UI/UX through partnerships with external technology firms. Deputy Head Jeong Sang-hoon of Jeonbuk Bank's Digital Division noted that the loan demonstrates designing risk management and recovery structures that allow leveraging existing bank lending systems without directly holding virtual assets. The service brings a South Korean bank's offering in line with a wider trend of bitcoin-backed lending evolving into a more mainstream source of credit. The defining feature of Jeonbuk's Bitcoin-backed loans is their narrow scope: corporate use, Bitcoin collateral, third-party custody and recovery through court-supervised sale. Whether the product expands will depend on the bank's experience and the direction of South Korea's crypto regulation.
Jeonbuk Bank's product is significant as the first case in South Korea of integrating virtual assets into bank lending within current legal and regulatory framework. Similar products are already operational at overseas financial institutions, including JPMorgan Chase, which launched Bitcoin-backed lending for institutional clients in March, and Switzerland's Sygnum Bank. The bank plans to accumulate related credit and risk management capabilities and upgrade digital asset financial infrastructure as regulations evolve, with decisions on expanding eligible collateral assets and adjusting service scope to be made after reviewing market demand and regulatory developments. The specific link between Project Hangang and the tokenized Treasury initiative has not yet been decided. The report did not disclose loan rates, borrowing limits, or collateral requirements, though the bank reviewed loan-to-value ratios and margin-call thresholds for major tokens, including bitcoin and ether, while designing the product.
