South Korea now has its first bank loans backed by bitcoin. Jeonbuk Bank has started issuing them to corporate clients in won. According to a bank official, one loan has already been issued.
What we know about the product
Jeonbuk Bank belongs to JB Financial Group. Local outlet Edaily reports that the money can only go toward a company's operating costs. Private individuals are not offered these loans.
For now, only Bitcoin is accepted as collateral. The bank does not hold the coins itself: a registered crypto service provider keeps them in custody while the bank issues the cash. The bank did not name the borrower.
What happens if the loan is not repaid
For that case, a court-ordered sale of the bitcoin is planned. The legal basis is the revised Civil Enforcement Rules that took effect on October 1. They describe how to seize and sell rights tied to digital assets.
The bank would hardly have risked it without them. A loan agreement secured by crypto is worth little if there is no clear recovery procedure.
Why bitcoin
The bank ran its own stress tests to see how the asset behaves in sharp drops. BTC won on deep liquidity: it can be sold when needed without crashing the price. Before launch, the bank also reviewed loan-to-value ratios and margin-call thresholds for major tokens, Ethereum among them.
Rates, limits and collateral requirements were not disclosed. Those numbers will decide whether businesses find the product attractive.
What comes next
The bank could expand the service if demand appears and crypto rules change. Its CEO, Park Chun-won, spoke about the country's first crypto-backed loan earlier this year, so the news is no surprise.
For Korea, this is the first case where an ordinary bank, not an exchange or a lending platform, takes bitcoin as collateral. The next thing to watch is whether other banks follow Jeonbuk.
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