South Korean bank launches Bitcoin-backed business loans: Report

South Korea’s Jeonbuk Bank, a subsidiary of JB Financial Group, reportedly started issuing Bitcoin-backed loans to its corporate customers.

Local outlet EDaily reported Monday that Jeonbuk Bank became the country’s first commercial bank to accept Bitcoin (BTC) as collateral for won-denominated lending. The bank is reportedly limiting the service to businesses seeking operational capital, while a specialized custodian holds the BTC used as collateral. 

The lending arrangement follows amendments to South Korea’s Civil Enforcement Rules that took effect on Oct. 1. According to the Supreme Court, the rules establish procedures for seizing and liquidating claims to virtual assets. In the event of a default, the bank can recover its funds through court-ordered sales. 

Jeonbuk Bank has adopted a system that allows it to recover outstanding loans through the proceeds of cryptocurrency sales without directly taking possession of the assets, according to EDaily.

The bank has not publicly disclosed the loan amount, interest rate, or loan-to-value requirements. A bank representative told local outlet Chosun that it had already issued a loan but declined to identify the borrower.

Cointelegraph reached out to JB Financial Group for confirmation, but did not receive an immediate response.

Related: South Korea crypto exchange profits fall 78% in H1 amid trading slump