Jeonbuk Bank Launches Bitcoin-Backed Loans for Corporate Clients in South Korea

Jeonbuk Bank has become the first bank in South Korea to offer won-denominated loans backed by Bitcoin, according to reports from Edaily. This initiative is aimed at corporate clients seeking working capital, with Bitcoin being the sole eligible collateral.

The bank clarified that it does not own or control the Bitcoin itself; instead, the collateral is held by a specialized custodian registered under Korea’s Act on the Reporting of Specific Financial Information. In the event of a default, Jeonbuk Bank will not take possession of the Bitcoin but will liquidate it through legal channels to recover the loan amount.

Jeonbuk Bank has opted for Bitcoin due to its significant market capitalization and trading volume, asserting that stress tests indicated Bitcoin's reliability as collateral even during volatile market conditions. The bank utilizes a pricing index based on a weighted average from multiple global exchanges to assess the collateral's value.

This loan offering aligns with the bank's vision of becoming a 'Crypto Bank,' as articulated by President Park Chun-won. Jeonbuk Bank is also the only regional bank providing real-name verified accounts for cryptocurrency exchanges and is developing an integrated wallet that combines fiat and digital asset accounts.

Jeong Sang-hoon, the executive vice president of the bank’s digital division, stated that this loan exemplifies a risk management structure that leverages existing banking systems without the need to directly hold virtual assets.