South Korea first bank-backed Bitcoin loan

[Munshi Prem Chand]

Bitcoin-backed loans offered from a traditional bank, or loans from Celsius/Blockfi/Genesis before they imploded, which one is more appealing to you?

It looks like BTC is becoming collateral for loans at actual banks. Jeonbuk Bank, bank in South Korea has offered country first loan that is collateralized by Bitcoin.

Note, this is NOT Crypto lending platform. Its regular bank that will offer loans that you can use BTC as collateral for. So it had to meet series of requirements to offer such a loan as any other bank.

What makes it unique is if someone defaults on such a loan, bank cannot go onto an exchange and sell the BTC. Instead it must go through the legal process and ask court for an order to sell. This can now be done thanks to new civil enforcement rules that go into effect on October 1st 2026. Its important because it creates framework for Banks to be able to take and sell crypto assets in certain situations.

It will be interesting to see how this progresses, but it definitely seems like BTC becoming an acceptable form of collateral at mainstream Bank is a big deal.

Source: https://www.coindesk.com/business/2026/10/12/south-korea-just-got-its-first-traditional-bank-loans-backed-by-bitcoin

[Oshosondy]

Bitcoin-backed loans offered from a traditional bank, or loans from Celsius/Blockfi/Genesis before they imploded, which one is more appealing to you?

I have not taken loan before on sites like Celsius before they went down. There are still sites that you can take the loan from, but which I am not interested in if my bank can offer such a loan, I will prefer to go for bank.

If the site is legit and offer lower interest rate, I may reconsider my decision. But because you have to pay collateral before you can be given the loan, people need to be careful because there could be a possible scam.

[fighter2627]

If we look carefully at what is stated in the articles, at first reading you will think that it is a good step that the bank backed bitcoin so that anyone who wants to borrow from them can borrow. Where we will look carefully at the market target of the bank is the bitcoin holders and believers in it.

Literally speaking, it is a good news, due to it adds a boost to the adoption of Bitcoin, but if I were the only one who was asked, I would prefer the usual way of using other collateral, not bitcoin. Due to it seems like it is difficult if you miss a payment because you will still go to court if I understand what I read in that news article correctly, this is just my opinion.

[Orpichukwu]

I tried to check the borrowing rate and interest, but it was not included in the article, as that’s important if you ask me. Bitcoin is volatile, and borrowing against it – what if a dip comes and the value of the collateral is reducing close to the loan amount taken? What will be the action taken, as banks will always want to protect their interest?

Bitcoin-backed loans might appear helpful to those who don’t want to sell their Bitcoin, but the policy and risk of losing that Bitcoin to the lender are on the high side that’s if interest and handling fees won’t be the first to rip you off.

[noorman0]

The bank’s name alone wouldn’t decide it for me. I’d want to know who holds the BTC, what happens if its price falls sharply, and how the collateral is returned after repayment. Those details would make the comparison with a crypto lending platform much more meaningful.

Typically, the loan value is far lower than the amount of Bitcoin pledged as collateral, and reports indicate that a liquidation system is also in place. Banks would not normally take on the risk associated with extremely volatile assets; however, the Bitcoin business landscape is simply too significant to overlook.

[notocactus]

I have not taken loan before on sites like Celsius before they went down. There are still sites that you can take the loan from, but which I am not interested in if my bank can offer such a loan, I will prefer to go for bank.

Loan itself is a risky financial action so banks don't make bank-backed Bitcoin loan no longer risky.

Bitcoin-backed loans might appear helpful to those who don’t want to sell their Bitcoin, but the policy and risk of losing that Bitcoin to the lender are on the high side that’s if interest and handling fees won’t be the first to rip you off.

I never give my bitcoin to anyone, any platform only because I need my money. If I need money, I will work for it while still hold my bitcoin if I can. Making loan with my bitcoin will cost my loan interest, and more important risk of losing my bitcoin as the loan collateral.

Chasing something small, satisfying short term need, are all not big reasons why I have to risk my valuable bitcoin. Many people, many institutional investors want and even are accumulating bitcoin, they want my bitcoin, and I will not lose my bitcoin cheaply because of loan and any liquidations.

[Doan9269]

Bitcoin-backed loans offered from a traditional bank, or loans from Celsius/Blockfi/Genesis before they imploded, which one is more appealing to you?

It looks like BTC is becoming collateral for loans at actual banks. Jeonbuk Bank, bank in South Korea has offered country first loan that is collateralized by Bitcoin.

Before I used to have the mentality of taking the Bitcoin loan and now I don't think it's too good idea any longer, a fourth benefits does it serve you when you are making profit after investing in Bitcoin loan to issue the interest you realize to your creditors, all this thing does not pay eventually at the end of the term, the best way is to have your bitcoin and hold until you are profitable, any collateral or non collateral platform will have the interest of doing all these for their own benefits and not because they actually wanted to loan you.

[Multani Boy]

Before I used to have the mentality of taking the Bitcoin loan and now I don't think it's too good idea any longer, a fourth benefits does it serve you when you are making profit after investing in Bitcoin loan to issue the interest you realize to your creditors, all this thing does not pay eventually at the end of the term, the best way is to have your bitcoin and hold until you are profitable, any collateral or non collateral platform will have the interest of doing all these for their own benefits and not because they actually wanted to loan you.

That really comes down to what your reason for borrowing is in the first place. If you are doing it simply to buy more BTC, then interest rate becomes an additional risk factor.

However, if you need short term liquidity and have a reasonable means to pay off the loan, then I think it is worth considering. It is crucial to ensure that repayment of the loan does not rely on the price of BTC increasing. The price could decline even if there is still a loan outstanding.

[Donneski]

This is surely a move to encourage Bitcoin adoption in South Korea. It's even more interesting to learn that borrowers maybe able to access loan without selling their Bitcoin, long-term holders who need cash but doesn't want to give up their position will find that very useful. That said, the risky part is that, depending on the bank's term, if Bitcoin's price falls significantly, the collateral might no longer be enough to cover the loan. They should show us the loan-to-value ratio as well as the conditions that talk about the fate of a borrower when the market turns against them.

[retreat]

If we look carefully at what is stated in the articles, at first reading you will think that it is a good step that the bank backed bitcoin so that anyone who wants to borrow from them can borrow. Where we will look carefully at the market target of the bank is the bitcoin holders and believers in it.
-snip-

It explains there that they only accept corporate clients, so literally not "everyone" can apply for a loan from this bank.

Jeonbuk Bank offers South Korea’s first Bitcoin-backed won loans for corporate clients, using third-party custody and strict risk controls. Collateral is liquidated via court if borrowers default.

I tried to check the borrowing rate and interest, but it was not included in the article, as that’s important if you ask me. Bitcoin is volatile, and borrowing against it – what if a dip comes and the value of the collateral is reducing close to the loan amount taken? What will be the action taken, as banks will always want to protect their interest?

It's true that the interest schemes, etc., weren't really explained in detail. But in the article it says something like this:

"The bank ran its own stress tests to assess how bitcoin would hold up during sharp price drops and chose BTC based on its deep liquidity, allowing the funds to be liquidated when needed."

Another article also explains how Jeonbuk Bank has developed a risk mitigation strategy to ensure the safety of bank capital and client collateral assets:

"This loan is an example of designing a risk management and recovery structure so that we can use the existing bank debt and collateral management system without having to directly hold virtual assets within the current law and system."

https://news.jkn.co.kr/post/1018133

So, with this explanation, the loans offered by Jeonbuk Bank should operate in accordance with the legal framework and risk mitigation they have designed. And most likely, it will always work in their favor.

[Hatchy]

It will be interesting to see how this progresses, but it definitely seems like BTC becoming an acceptable form of collateral at mainstream Bank is a big deal.

It's not actually a big deal but this is not something I find very appealing, and I'm not sure I would ever be willing to do it. What is the point of taking out a loan and using my Bitcoin as collateral when I can simply sell a small portion if I urgently need money? If Bitcoin is the only asset I have available, I would rather sell just enough to take care of my needs and buy back later when I'm financially stable again.

I don't like the idea of giving a bank or any other third party access to my Bitcoin. In fact, it's the last thing I would want a bank to know I own. One of the things I value most about Bitcoin is having control over my own money without having to depend on a third party. So, why would I put that control at risk just to take out a loan? As far as I'm concerned, I'd rather reduce my Bitcoin holdings temporarily than put my coins in someone else's hands and risk losing them.

[CTO114]

Bitcoin-backed loans offered from a traditional bank, or loans from Celsius/Blockfi/Genesis before they imploded, which one is more appealing to you?

It looks like BTC is becoming collateral for loans at actual banks. Jeonbuk Bank, bank in South Korea has offered country first loan that is collateralized by Bitcoin.

Note, this is NOT Crypto lending platform. Its regular bank that will offer loans that you can use BTC as collateral for. So it had to meet series of requirements to offer such a loan as any other bank.

What makes it unique is if someone defaults on such a loan, bank cannot go onto an exchange and sell the BTC. Instead it must go through the legal process and ask court for an order to sell. This can now be done thanks to new civil enforcement rules that go into effect on October 1st 2026. Its important because it creates framework for Banks to be able to take and sell crypto assets in certain situations.

It will be interesting to see how this progresses, but it definitely seems like BTC becoming an acceptable form of collateral at mainstream Bank is a big deal.

Source: https://www.coindesk.com/business/2026/10/12/south-korea-just-got-its-first-traditional-bank-loans-backed-by-bitcoin

From a personal point of view, one very interesting take from the Korean Bitcoin backed loan is the implications of what such a move will make for the cut of Bitcoin, and not just the loan itself.
 
For years there's always been the discussion surrounding Bitcoin being more useful, and not just a mere speculation. So being used now as a collateral to access traditional credit without selling it makes the discussion more interesting.

My only concern is being that volatility can turn an opportunity into liability in the event that prices fall rapidly.

We're seeing a future where owning Bitcoin becomes useful without the need to sell it!

[serjent05]

It will be interesting to see how this progresses, but it definitely seems like BTC becoming an acceptable form of collateral at mainstream Bank is a big deal.

It's not actually a big deal but this is not something I find very appealing, and I'm not sure I would ever be willing to do it. What is the point of taking out a loan and using my Bitcoin as collateral when I can simply sell a small portion if I urgently need money? If Bitcoin is the only asset I have available, I would rather sell just enough to take care of my needs and buy back later when I'm financially stable again.

I also think the same.  I have the fund, and all I need is to sell my Bitcoin to meet my needs.  Why would I go through the trouble of looking for a loan, sending my BTC as collateral, and paying them with interest?  Too much trouble.  After selling my BTC, I can always DCA to recover the BTC I sold.

But sure, the news about a bank accepting Bitcoin to back a loan is good news for Bitcoin adoption.  Other than that, I do not think of any thing else.

[Myleschetty]

Bitcoin-backed loans offered from a traditional bank, or loans from Celsius/Blockfi/Genesis before they imploded, which one is more appealing to you?

In the year 2022, the collapse of Celsius, BlockFi, and Genesis resulted in withdrawals being frozen and bankruptcy filings. Some crypto enthusiasts who don't see KYC as a drawback may choose a traditional bank as a better option based on how they operate under much stricter regulations, have deposit insurance frameworks (even if the crypto collateral itself isn't insured the same way), and have a liquidation process that goes through the courts rather than a private company deciding unilaterally.

[Alphakilo]

It will be interesting to see how this progresses, but it definitely seems like BTC becoming an acceptable form of collateral at mainstream Bank is a big deal.

It's not actually a big deal but this is not something I find very appealing, and I'm not sure I would ever be willing to do it. What is the point of taking out a loan and using my Bitcoin as collateral when I can simply sell a small portion if I urgently need money? If Bitcoin is the only asset I have available, I would rather sell just enough to take care of my needs and buy back later when I'm financially stable again.

I also think the same.  I have the fund, and all I need is to sell my Bitcoin to meet my needs.  Why would I go through the trouble of looking for a loan, sending my BTC as collateral, and paying them with interest?  Too much trouble.  After selling my BTC, I can always DCA to recover the BTC I sold.

But sure, the news about a bank accepting Bitcoin to back a loan is good news for Bitcoin adoption.  Other than that, I do not think of any thing else.

I like you point because it really makes no sense to have enough Bitcoin that can be swapped to a desired currency for less and instead of doing so, expose oneself to the financial bank system to collect a loan with interest that may be less than the Bitcoin used as collateral.
While I think few persons would consider this idea to use, I think it's just the banking sector coming out to partially agree that the recognize Bitcoin and can accept it in special cases, otherwise it's basically a useless front to accepting Bitcoin.
This also shows how Bitcoin is being accepted and adopted gradually as it undergoes certain evolution and maintain its image and integrity.

[Munshi Prem Chand]

What is the point of taking out a loan and using my Bitcoin as collateral when I can simply sell a small portion if I urgently need money?

This is another reason why they might prefer a loan to selling: taxes. In many jurisdictions, selling BTC is taxable event. A loan isnt, because youre not actually selling the asset. If you bought BTC 10 years ago when it was cheap, then it will have appreciated massively and you might face huge capital gains tax bill if you sell now. With loan, you can still access liquidity without having to realise that gain.

They should show us the loan-to-value ratio as well as the conditions that talk about the fate of a borrower when the market turns against them.

We dont know, as Jeonbuk has yet to release an official figure. However, previous crypto lending platforms, including defunct BlockFi and Celsius, have typically maintained 25-50% LTVs on BTC, compared to 50-80% LTVs on more traditional forms of collateral like stocks and real estate because BTC is riskier. Given that Jeonbuk is regulated bank with presumably well stress-tested risk management controls, we might expect them to come in at the low end of that historical LTV range, i.e. well below 50%, to provide themselves with healthy margin of error before liquidations must occur on falling BTC prices.

I tried to check the borrowing rate and interest, but it was not included in the article, as that's important if you ask me.

Good point, and likely why thats not listed here; these are corporate secured loans, which tend to be negotiated individually other than having a published flat rate like retail product would.
Also worth noting, per snippet the other commenter posted from the Korean article, this loan program is only available to corporate customers with third party custodian, so I dont think its really comparable to a BTC backed retail loan from a crypto exchange; different risk pool, different pricing.

[Oasisman]

Well, this sounds like a good boost for Bitcoin adoption. I don't see anything wrong with this coz we all have different preferences, until the borrower defaulted their loans, that I'm sure a lot of complications will happen.
One of the common thing I can see is that the bank cannot instantly sell the borrower's collateral and that it must go to the court first. We all know court process is a lengthy process and will take time, and that means during the process, the borrower's interest and penalties will continue to grow. The worst part is, when Bitcoin suffers a huge dip, that when the court process concluded and it was sold at a very low price, there will be a huge possibility that the total cost of the sold Bitcoin may not cover the amount of overall balance left from their debt. So eventually, the borrower might going to pay triple or more than the original amount of the loan in that case.

IMO, giving the bank your Bitcoin as a collateral to a loan is not really a good idea. I can somehow make a bit of consideration if you're pretty sure it won't get defaulted. But in desperate times, I'd rather sold part of my Bitcoin for as long as my portfolio isn't bleeding.

[Uhwuchukwu53]

I read through the article op never highlights how the interest rate will work, every borrowing or lending both the borrower and the lender must have that first consideration as it's what propelled those that will go for such loan , it's a good way of promoting adoption, the challenges over the process is the volatile nature of Bitcoin and also the time frame to which the loan will last what will be the out come if one Bitcoin has already be used as collateral and for instance specific interest rate is agreed if the market dip during the pay back it will automatically sweep up all your asset to meet the interest rate if the interest , if it's non negotiable at the time of payment during dip, the idea of court granting permission is good the borrower can still adjust within the period and pay before court finished granting their order.

[stompix]

What makes it unique is if someone defaults on such a loan, bank cannot go onto an exchange and sell the BTC. Instead it must go through the legal process and ask court for an order to sell.

No it doesn't!
A loan contract carries executory power, so they don't need to go for each client and ask a judge ro rule on the case, they already have the paper that allows this, the only thing is they need a licenseed trustee to do the exchange, as they will not be the ones selling it nor the ones being in custody off.
People really bought that stupid wording from some newspapers and they thought that the bank will not be able to sell the coins unless they sue you, which is pretty false.

[Munshi Prem Chand]

No it doesn't!...

Not sloppy language. CoinDesk, Cointelegraph and Edaily all report that Jeonbuk set it up in a form that can be sold after judicial decision, instead of including a private sale clause.

Since it is under regulations in Korea, a registered custodian, not the bank, would keep the BTC, which means that it cannot unilaterally sell it. Also way to execute such judicial sales of the digital assets is stipulated in the revised Execution Rules (effective as of Oct 1, 2026). It likely did it on purpose considering the legal framework.