South Korea’s Jeonbuk Bank has launched the country’s first loan program allowing businesses to borrow Korean won using Bitcoin as collateral. The program initially serves corporate clients who need funds for business operations, with plans to consider expansion based on regulatory changes and market demand.

Jeonbuk Bank Limits Bitcoin Loans to Businesses

Announced on October 12, 2026, the program marks a step toward CEO Park Choon-won’s vision of developing a “crypto bank.”

For now, only registered corporate customers can apply, and the program accepts only Bitcoin as collateral. Borrowers can use the funds for business expenses, including payroll, supplier payments, and other operating costs. Individual customers cannot access the loans.

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Meanwhile, retail customers cannot access the service, and the funds cannot be used for crypto speculation.

Jeonbuk Bank selected Bitcoin because it has the largest market capitalization and trading volume among cryptocurrencies. It also successfully tested how Bitcoin would perform as collateral during sharp price drops.

Jeonbuk Bank Vice President of the Digital Division Jeong Sang-hoon said,

 “We will continue to enhance our digital asset financial capabilities in line with future changes in relevant laws and regulations.

Bitcoin Held by External Custody Providers

Jeonbuk Bank will not hold or directly manage the pledged Bitcoin. Instead, approved custody providers that meet South Korea’s security and regulatory requirements.

These providers must hold Information Security Management System (ISMS) certification and comply with the Virtual Asset User Protection Act.

The bank will also calculate Bitcoin’s collateral value using a weighted average price from multiple global exchanges. This is designed to reduce the impact of sharp price swings on individual trading platforms.

Court Approval Required to Sell Collateral

The program also has specific rules for handling loan defaults. If a business fails to repay its loan, the bank cannot simply take the Bitcoin and sell it.

Under South Korea’s revised Civil Execution Rules, which took effect on October 1, 2026, the bank must obtain a court order to sell the collateral through a public auction and recover the outstanding debt.

This process adds another layer of oversight to the lending arrangement.

South Korea is not alone in exploring Bitcoin-backed loans. JPMorgan Chase and Swiss bank Sygnum have also introduced similar lending services, showing growing interest in using digital assets as collateral.