South Korea Pioneers Bitcoin-Backed Business Loans

Introduction

South Korean bank Jeonbuk Bank has reportedly begun offering Bitcoin-backed loans to corporate customers, with a third-party custodian holding the cryptocurrency used as collateral. According to local outlet EDaily, Jeonbuk Bank became the country's first commercial bank to accept Bitcoin (BTC) as collateral for won-denominated lending. The bank is reportedly limiting the service to businesses seeking operational capital, while a specialized custodian holds the BTC used as collateral. This lending arrangement follows amendments to South Korea's Civil Enforcement Rules that took effect on Oct. 1, which establish procedures for seizing and liquidating claims to virtual assets. In the event of a default, the bank can recover its funds through court-ordered sales. Jeonbuk Bank has adopted a system that allows it to recover outstanding loans through the proceeds of cryptocurrency sales without directly taking possession of the assets, according to EDaily. The bank has not publicly disclosed the loan amount, interest rate, or loan-to-value requirements. A bank representative told local outlet Chosun that it had already issued a loan but declined to identify the borrower. Cointelegraph reached out to JB Financial Group for confirmation, but did not receive an immediate response.