South Korea’s Jeonbuk Bank Launches First Bitcoin-Backed Corporate Fiat Loans

Jeonbuk Bank has become the first traditional financial institution in South Korea to offer won-denominated loans backed by Bitcoin $BTC. The credit product is currently restricted to corporate customers seeking to raise working capital, with Bitcoin serving as the sole eligible collateral. To mitigate direct market exposure, Jeonbuk Bank doesn't custody the digital assets itself; the collateral is instead held by specialized virtual asset service providers registered under South Korea's financial reporting laws. In the event of a borrower default, the bank won't take possession of the digital collateral, but will instead initiate enforcement procedures like a court-ordered sale to liquidate the assets and recover the fiat principal. “This loan is an example of designing a risk management and recovery structure that allows us to utilize existing bank lending and collateral management systems without directly holding virtual assets.” — Jeong Sang-hoon, Executive Vice President of Jeonbuk Bank’s Digital Division.