South Korea just got its first traditional bank loans backed by bitcoin
South Korea's Jeonbuk Bank has launched the country's first bank loans backed by bitcoin collateral. The bank uses a third-party custodian for the assets and has implemented strict risk management protocols to handle market volatility.
Why it matters
This marks a significant step toward the mainstream integration of cryptocurrency into traditional banking and credit systems.
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.
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in