South Korean Bank Launches Bitcoin-Backed Commercial Loans: Report

Reports indicate that Jeonbuk Bank has begun offering Bitcoin-backed loans to customers of large companies, with a third-party custodian holding the digital currency as collateral.

Jeonbok Bank has reportedly begun offering bitcoin-backed loans to corporate customers, with a third-party custodian holding the cryptocurrency used as collateral.

South Korea's Jeonbuk Bank, a subsidiary of JB Financial Group, has begun offering bitcoin-backed loans to its corporate customers.

Local publication EDaily reported on Monday that Jeonbuk Bank is the country's first commercial bank to accept Bitcoin (BTC) as collateral for loans. The bank reportedly limits services to businesses seeking operating capital, while a specialized custodian holds used bitcoins as collateral.

The lending arrangements follow reforms to South Korea's civil enforcement laws that took effect on October 1. According to the Supreme Court, the laws set out procedures for the seizure and liquidation of claims on virtual assets. In case of default, the bank can recover its funds through court-ordered sales.

According to EDaily, Jeonbuk Bank has adopted a system that allows it to recover delinquent loans through proceeds from the sale of digital currencies without directly taking over the assets.

The bank has not publicly disclosed loan amounts, interest rates, or loan-to-value requirements. A representative of the bank told local media Chosun that it had previously issued loans but declined to identify the borrower.

Cointelegraph contacted GB Financial Group for confirmation, but did not immediately receive a response.