Jeonbuk Bank starts Bitcoin-backed loans for South Korean firms

Jeonbuk Bank began offering won-denominated loans backed by Bitcoin to corporate customers on Oct. 12, giving businesses a way to borrow working capital against BTC, according to EDaily’s report. The South Korean lender, a subsidiary of JB Financial Group, is limiting the loans to business operating expenses and currently accepts only Bitcoin as collateral.

Who can borrow, and what collateral can they use?

The loans are available only to corporate customers seeking funds for business operations, and Bitcoin is the sole eligible asset, EDaily reported. Jeonbuk Bank has not disclosed the loan amount, interest rate or loan-to-value requirements, according to Cointelegraph’s report.

Where is the Bitcoin held, and how can the bank recover a loan?

A specialized custodian holds the Bitcoin, while Jeonbuk Bank neither owns nor directly controls the assets, EDaily reported. The bank can seek to recover a defaulted loan through enforcement procedures, including a court-ordered sale of the collateral, under South Korea’s amended Civil Enforcement Rules, which took effect Oct. 1.

Will Jeonbuk Bank expand the service?

Jeonbuk Bank plans to review possible expansion based on regulatory changes and market demand, EDaily reported. The bank also plans to build experience in digital-asset lending and risk management, including systems to monitor collateral values and recover loans as regulations change.

Source material

• EDaily’s report — en.edaily.co.kr
• Cointelegraph’s report — cointelegraph.com