South Korea’s Jeonbuk Bank Lends Won Against Bitcoin, Using Court Sales for Defaults

Jeonbuk Bank, a regional South Korean lender, has extended a corporate loan in won secured by Bitcoin, under a setup in which the bank never takes possession of the coins, even if the borrower defaults.

Local outlet Edaily first reported the loan on Oct. 12, describing it as the first of its kind from a South Korean bank. A Jeonbuk Bank spokesperson confirmed to Jaekyung Ilbo that a loan had actually been made but said the borrower could not be disclosed. The bank, a unit of JB Financial Group, has not published a press release or filing on the product, or the date the loan was made.

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For now, the product is open only to corporate customers, accepts only Bitcoin as collateral and limits the proceeds to business operating funds, according to the reports. The pledged BTC sits with a third-party custodian, and the bank has neither ownership of it nor direct control over it. The bank has restricted the custodian role to virtual asset service providers registered under Korea’s financial reporting law.

If a borrower defaults, the bank would not receive the Bitcoin. It would instead convert the collateral to cash through court enforcement, such as a sale order, and repay itself from the proceeds. That route depends on the Supreme Court of Korea’s amended Civil Enforcement Rules, which the outlets said took effect Oct. 1 and set procedures for seizing and liquidating virtual assets.

The bank values the collateral with its own multi-exchange price benchmark and stress-tested it against sharp Bitcoin price drops, according to Edaily.

The loan was designed to use the bank’s existing lending and collateral systems “without directly holding virtual assets,” Jeong Sang-hoon, executive vice president of the bank’s digital division, said in Edaily’s English-language edition.

The loan-to-value ratio, interest rate and loan size were not disclosed, TechM reported. A bank spokesperson told the outlet the loan fell within the lending business allowed under Korea’s Banking Act and had not received a regulatory sandbox designation.

No Korean statute explicitly bars crypto as loan collateral, but a 2017 to 2018 government crackdown included a ban on financial firms lending against virtual assets, which hardened into a de facto rule, according to Jaekyung Ilbo. Edaily and Jaekyung Ilbo reported that the bank plans to weigh widening the eligible collateral and services later, based on regulatory changes and demand.

The loan is the first product of CEO Park Chun-won’s “Crypto Bank” plan, according to Edaily. Park signaled crypto-collateral lending earlier this year.

Edaily cited JPMorgan Chase and Switzerland’s Sygnum Bank as lenders already offering similar credit overseas. In June 2025, JPMorgan was reported to be planning to accept crypto ETFs as loan collateral, which involves fund shares rather than Bitcoin held directly.

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