On October 12, 2026, the Bank of Korea ( Jeonbuk Bank ) launched South Korea's first won loan secured by Bitcoin, allowing corporate customers to obtain financing for their operations based on their holdings of cryptocurrency.

This type of Bitcoin mortgage loan separates lending from custody: Registered service providers are responsible for holding the collateral, while banks provide loans in Korean won, but do not acquire ownership of the pledged assets.

Key Points

• The first batch of products from Bank of North Korea are targeted at corporate borrowers who use Bitcoin as collateral.
• The cryptocurrencies that are pledged are held by registered custodian institutions, not by lending banks.
• Rules effective from October 1, 2026, allow for the sale of collateral through a court order after the borrower defaults.
• The bank uses global exchange prices and volatility indicators to value collateral.

According to a report by Edaily on October 12th, cited by crypto.news, this subsidiary of JB Financial Group has begun to provide this service on a limited basis. Currently, Bitcoin is the only digital asset that meets the requirements, and borrowers must also be corporate clients seeking funds for business operations.

Bank of North Korea provides Bitcoin mortgage loans to corporate borrowers

BNK’s Bitcoin mortgage loans provide KRW financing in accordance with current Korean banking and digital asset laws. Customers pledge cryptocurrencies held by professional custodian institutions, rather than transferring them to the bank’s name.

After evaluating liquidity, market size, and the suitability for valuation as collateral, Bitcoin was chosen. The report states that banks believe Bitcoin's leading position in terms of market value and trading volume provides a more reliable pricing benchmark compared to smaller digital assets.

The internal stress test examined the scenario of a significant drop in Bitcoin prices and supported the bank's judgment that it is still suitable as collateral under stress conditions. Trading liquidity is equally important, as once borrowers fail to repay their loans, the pledged assets need to be converted into cash.

Register for a managed and proprietary valuation system

Only virtual asset service providers registered in accordance with the relevant laws on financial transaction reporting in South Korea are allowed to hold the pledged Bitcoin. Bank of North Korea neither controls these cryptocurrencies nor directly manages the wallets that store customers' collateral.

Service providers that meet the requirements must satisfy information security management certification standards as well as the obligations stipulated in the "Travel Rules" ( Travel Rule ). The "Virtual Asset User Protection Law" also requires customer asset isolation, cold wallet storage guarantees, as well as insurance or reserve arrangements.

The bank's proprietary valuation system combines a weighted index of global exchange prices with a median indicator of market volatility. According to the report, BNK became the first bank in South Korea to establish such a digital asset pricing framework.

This approach reduces dependence on a single exchange, as abnormal transactions or temporary interruptions may affect the prices on that platform. The reference indicators selected in this case are publicly available, along with their calculation methods and components.

Execution rules revised to establish a recourse path, effective from October

Effective from October 1, 2026, the revised regulations allow the Bank of North to sell Bitcoin collateral through a court order in the event of a borrower's default in order to seek repayment. The proceeds from the sale will be used to settle the outstanding debt, but the bank itself will not receive these cryptocurrencies.

The revised civil enforcement framework stipulates procedures for seizing and realizing rights related to the transfer of virtual assets, which include court-supervised enforcement of security interests. Custody and asset management are still the responsibility of registered service providers, while lending institutions follow traditional lending and collateral recovery procedures.

Risk Management and Integrated Wallet Plan

According to Jung Sang - hoon, the vice president of the digital department of the bank, when Full North Bank established its risk management and recovery procedures, it aimed to ensure that its operations stayed within the boundaries of existing laws. He stated that this service applies the bank's mature lending and collateral management systems to digital assets without directly holding digital assets themselves.

This product is the first commercial achievement under the strategy of "crypto-focused bank" crafted by Bank President Park Chun - won. The bank plans to utilize its initial lending experience to further improve the mechanisms for collateral monitoring, valuation, and recovery. After assessing market demand, operational experience, and regulatory requirements, it will consider adding more types of assets and loan purposes.

A dedicated blockchain and digital assets team has previously conducted research on payment, remittance, and stablecoin services through technical proof-of-concept projects. The bank is also collaborating with external technology companies to develop integrated wallets, with plans to integrate traditional accounts with digital asset wallets into the same interface.

This article was generated with the assistance of artificial intelligence and has been reviewed by an editorial team.