South Korea’s Jeonbuk Bank, part of JB Financial Group, became the country’s first commercial bank to issue a loan in local currency backed by Bitcoin. The borrower was a company that received the funds to finance its operations.
Jeonbuk Bank (JB Bank) developed a lending structure that uses BTC as collateral without transferring ownership to the bank. A specialized institution handles the custody and management of the assets, while the borrower receives a loan in South Korean won. The arrangement was reported by EDaily.
The lending structure includes several conditions:
Only Bitcoin is accepted as collateral. Other cryptocurrencies aren’t currently eligible.
Loans are available exclusively to legal entities to finance business operations.
Collateral is held by a registered service provider, rather than directly by the bank.
If a borrower defaults, the BTC is sold through judicial proceedings, with the proceeds used to repay the outstanding debt.
The judicial debt recovery mechanism became possible following amendments to South Korea’s civil enforcement rules that took effect on October 1, 2026. The changes established procedures for seizing and enforcing claims for the transfer of digital assets.
To determine the value of the collateral, JB Bank developed its own digital asset valuation system, which takes into account:
Volume-weighted BTC prices across several international cryptocurrency exchanges;
Median market volatility measures;
A publicly disclosed methodology for calculating the price benchmarks used.
JB Bank selected Bitcoin because of its high liquidity and the largest market capitalization among cryptocurrencies. Before executing the transaction, the bank conducted stress tests simulating a sharp decline in BTC prices. Based on the results, the bank concluded that its lending structure could manage the risk of collateral depreciation and allow the collateral to be liquidated.
According to Maeil Business Newspaper, the initiative currently involves a single pilot transaction under the bank’s existing corporate lending program. The loan amount and the value of the collateral weren’t disclosed. An unnamed JB Bank representative told Aju News that the transaction was conducted under existing banking regulations and didn’t require special authorization to provide innovative financial services.
The bank views Bitcoin-backed lending as the first practical outcome of its strategy to develop digital asset services. It plans to further refine its collateral valuation and risk management mechanisms, while any expansion of the lending program will depend on regulatory changes and market demand.
JB Bank is also exploring the use of stablecoins for digital payments and remittances. In collaboration with external technology companies, the bank is already developing a universal digital wallet that combines bank accounts and digital asset wallets in a single application.
Jeonbuk Bank’s initiatives also align with South Korea’s official economic growth strategy, which includes the development of blockchain technology and the digital asset market.
