Jeonbuk Bank has begun offering bitcoin-backed loans to corporate clients, marking the first won-denominated bank loan in South Korea secured by Bitcoin collateral. The bank will initially accept only bitcoin as collateral on a limited basis, with plans to expand depending on demand and regulatory developments.
The Financial Services Commission approved cryptocurrency exchange operators in 2021 and has since permitted banks to maintain crypto asset custody accounts, though direct lending against digital collateral remained untested among major lenders until now.
Jeonbuk Bank, a mid-sized regional lender headquartered in Jeonju, serves primarily corporate and small business clients across Jeolla province. The bank's decision to pilot bitcoin-backed loans comes as retail crypto ownership in South Korea ranks among the world's highest by household penetration.
The collateral will be held in third-party custody, according to reporting on the launch. This custody arrangement separates the bank's balance sheet from direct bitcoin holdings and addresses regulatory concerns about banks' direct exposure to volatile digital assets. The structure allows Jeonbuk to offer the loans without holding the underlying collateral on its own books.
South Korea has seen repeated attempts to formalize cryptocurrency lending and custody within the traditional banking system. Previous proposals for digital asset banking frameworks stalled in parliament, leaving individual institutions to operate through pilot programs. Jeonbuk's launch tests whether limited, incremental offerings can establish precedent without triggering legislative pushback.
The bank did not disclose loan size, pricing, or the number of corporate clients it intends to serve in the initial phase. The program either received informal regulatory clearance or operates within existing frameworks that permit collateralized lending without specific cryptocurrency carve-outs.
Jeonbuk's bitcoin-backed loan product follows a 2024 proposal by the Korea Banking Association to create a formal framework for cryptocurrency collateral lending, which gained traction but did not advance to legislation. This pilot program represents the first practical implementation by a major depositary institution, though smaller fintech and non-bank lenders have offered similar products in South Korea's less-regulated private credit market for several years. If Jeonbuk expands the program without regulatory intervention within the next two quarters, other regional banks may follow with their own offerings.
