Borrow Without Selling Bitcoin: South Korea Takes First Step for Companies

Jeonbuk Bank in South Korea has launched a service allowing companies to use their Bitcoin as collateral for won-denominated loans without selling it, and has issued its first loan.

According to CoinDesk, citing local media, Jeonbuk Bank, part of JB Financial Group, has become the country’s first bank to offer companies cash loans backed by crypto assets. The loan proceeds can be used only for business expenses.

A bank official confirmed to Jaekyung Ilbo that at least one loan had been issued but did not disclose the borrowing company’s name. For now, the service accepts only Bitcoin as collateral.

A custodian, not the bank, will hold the Bitcoin

Under the model, a company uses its Bitcoin holdings as collateral and receives the loan in Korean won. The BTC pledged as collateral is held not by the bank itself, but by a registered crypto service provider.

This arrangement allows the company to access cash for business expenses without initially selling its Bitcoin. If the loan is not repaid, the bank can seek a court order to sell the Bitcoin to recover the amount owed.

Bank tested sharp price declines

According to local media, the recovery process is based on enforcement rules that took effect on October 1, setting out the legal steps for seizing and selling rights tied to digital assets.

Jeonbuk Bank conducted stress tests while developing the product to assess how it would perform during sharp declines in Bitcoin’s price. The high liquidity that makes it easier to convert BTC into cash when needed was among the reasons for choosing it as collateral.

The bank may expand the service depending on market demand and changes in crypto regulations. The initial offering is limited to corporate customers and Bitcoin collateral.