South Korean Bank Launches Bitcoin Backed Business Loans

South Korea’s Jeonbuk Bank, a subsidiary of JB Financial Group, has reportedly started issuing Bitcoin backed loans to its corporate customers, becoming the country’s first commercial bank to accept BTC as collateral for won denominated lending.

The service is limited to businesses seeking operational capital, while a specialized custodian holds the Bitcoin used as collateral.

New Legal Framework Allows Crypto Seizure

The lending arrangement follows amendments to South Korea’s Civil Enforcement Rules that took effect on October 1. According to the Supreme Court, the rules establish procedures for seizing and liquidating claims to virtual assets, allowing the bank to recover funds through court ordered sales in the event of a default.

Jeonbuk Bank has adopted a system that lets it recover outstanding loans through the proceeds of cryptocurrency sales without directly taking possession of the assets.

Loan Terms Remain Undisclosed

The bank has not revealed the loan amount, interest rate, or loan to value requirements. A bank representative confirmed that a loan has already been issued but declined to identify the borrower.

The move marks a notable step in South Korea’s banking sector, where regulators have gradually built the legal groundwork for institutions to engage with digital assets as collateral.