South Korea just got its first traditional bank loans backed by bitcoin

Jeonbuk Bank has started offering bitcoin-backed loans to corporate clients, becoming the country’s first bank to let firms borrow cash against their crypto holdings.

The South Korean bank, a unit of JB Financial Group, will issue loans in the country’s fiat currency, the Korean won, with proceeds limited to business operating costs, according to local news outlet Edaily.

A Jeonbuk Bank official confirmed to local outlet Jaekyung Ilbo that a loan has already been executed, but declined to name the borrower.

Only bitcoin BTC$84,155.39 can be used as collateral for these loans for the time being. Jeonbuk Bank will not hold the BTC itself and instead, a registered crypto service provider will keep the assets in custody while the bank issues the loan.

If a borrower fails to repay, the bank would move to recover its money through a court-ordered sale of the bitcoin.

The process draws on revised Civil Enforcement Rules that took effect Oct. 1, per the local news outlet. These changes set out legal steps for seizing and selling rights tied to digital assets.