BNK becomes the first bank in South Korea to offer Bitcoin mortgage loans
Korea's Full North Bank has launched the country's first won loan secured by Bitcoin, allowing corporate customers to use their held cryptocurrencies as collateral to obtain business financing.
- BNK became the first bank in South Korea to offer Bitcoin-backed Korean won loans, with initial services limited to corporate customers applying for working capital.
- This line will accept Bitcoin as collateral through registered digital asset custodian institutions and will not directly acquire or control the pledged cryptocurrencies.
- New enforcement rules that took effect on October 1st allow banks to sell bitcoin collateral ordered by the court in order to recover unpaid loans.
- Bank of North Korea has developed its own digital asset valuation system, which utilizes prices from multiple global exchanges and market volatility indicators to assess the value of collateral.
- As regulations evolve, the bank plans to evaluate more digital assets and lending services, while also advancing the construction of infrastructure for payments, remittances, and comprehensive wallets.
According to a report by local media Edaily on October 12th, the bank under this JB financial group has begun to provide this service on a limited basis, currently accepting only Bitcoin as collateral.
This loan is limited to corporate borrowers who need financing for their business activities. Bank of Korea stated that it will assess whether to adjust this service based on regulatory developments and customer needs.
According to this arrangement, customers pledge their Bitcoin, which is held by professional digital asset custodian institutions, while banks provide Korean won financing without directly holding or controlling the cryptocurrency.
This line indicates that the design of this product is to operate within the existing regulatory framework of banks and digital assets in South Korea, which includes newly introduced procedures for executing claims against cryptocurrency collateral.
BNK adopts third-party custody for Bitcoin loans
After evaluating liquidity, market size, and the suitability of Bitcoin as collateral for valuation, Bank of North Korea chose Bitcoin.
This line indicates that Bitcoin is the largest cryptocurrency in terms of market capitalization and trading volume, and therefore, compared to smaller digital assets, it can provide a more reliable market price and valuation benchmark.
Internal stress testing examined the performance of collateral during a significant decline in Bitcoin prices. The report states that the test results support the bank's conclusion that, in a stressful market environment, Bitcoin can still be used as a suitable collateral.
High trading liquidity is also a factor, because if the borrower fails to repay the loan, the lending institution needs to liquidate the collateral assets into cash.
To calculate the value of collateral, Bank of Korea developed its own digital asset pricing standards. Reports indicate that this is the first such framework established by a bank in South Korea.
Its valuation system uses a weighted index composed of prices from multiple global cryptocurrency exchanges, combined with a median indicator of market volatility.
This method is aimed at reducing dependence on the prices of a single exchange, as abnormal trading activities or short-term market disruptions may affect valuation. The reference indicators chosen by this bank are publicly available, as are their calculation methods and components.
The custody arrangements are handled separately from the bank's lending business.
Only virtual asset service providers that are registered in accordance with the relevant laws on financial transaction reporting in South Korea are qualified to hold pledged Bitcoin.
Registered service providers must comply with information security management certification requirements and the obligations specified by “Travel Rule”. According to South Korea's ‘Virtual Asset User Protection Act’, these institutions are also required to maintain isolation of customer assets, meet the storage requirements for cold wallets, and either purchase insurance or establish reserves.
Bank of North Korea will not directly manage the wallets that store customers' collateral.
The newly implemented rule provides a pathway for the recovery of Bitcoin collateral.
This loan product was launched after the revision of South Korea's civil enforcement rules came into effect on October 1st.
The revised framework establishes procedures for seizing and realizing claims involving the transfer of virtual assets, which include the enforcement of security interests through court-supervised procedures.
If the borrower defaults, Bank of Korea can apply to have the pledged cryptocurrencies sold by court order to recover the debt.
The proceeds from the sale will be used to repay the outstanding loans, without the need for banks to directly receive Bitcoin.
This arrangement is aimed at keeping the role of banks within the scope of traditional lending and collateral recovery procedures, while leaving cryptocurrency custody and asset management to registered service providers.
Jeong Sang-hoon, vice president of the digital business department at BNK, stated that this product demonstrates how to apply existing bank lending and collateral management systems to digital assets without the need to directly hold the underlying cryptocurrencies.
He said that the bank has designed risk management and recovery procedures within the current legal framework and will continue to develop its financial capabilities for digital assets as regulatory changes occur.
The report does not disclose the loan interest rate, loan-to-value ratio, total lending volume, or the identity of the custodian service provider.
Bitcoin mortgage loans are gradually being promoted among global banks.
Before Full North Bank launched this product, financial institutions outside of South Korea had already introduced similar loan products.
As previously reported by crypto.news, in March 2026, JPMorgan Chase began accepting Bitcoin as collateral for loans to institutional clients through its Kinexys digital asset platform.
JPMorgan's projects cover Bitcoin and Ethereum, with the collateral assets held by third-party custodian institutions, including Fidelity Digital Assets and Coinbase Custody. The bank manages its exposure to cryptocurrency price fluctuations through collateral valuation and margin requirements.
Swiss digital asset bank Sygnum also offers similar cryptocurrency mortgage loan services.
Service providers for institutional financing have also developed other arrangements for clients who wish to obtain liquidity through digital assets.
In April this year, BitGo launched an institutional financing platform that allows customers to borrow and lend using cryptocurrency holdings in liquid, pledged, and locked states through a single managed account.
The platform supports portfolio-based collateral management, allowing eligible institutions to use various digital assets without the need to transfer them between multiple lenders.
Bank of North Korea advances digital asset business
This Bitcoin lending product is the first commercial achievement under the strategy of making the bank focus on cryptocurrency services, led by Park Chun-won, the president of Full North Bank.
Park Chun-won has regarded digital assets as an important part of the future financial infrastructure and has requested that the bank establish professional capabilities in this area as traditional financial institutions begin to offer cryptocurrency services one after another.
Reports indicate that Bank of Korea has previously accumulated experience in providing real-name deposit and withdrawal accounts for cryptocurrency exchanges, which also makes it the only regional bank in South Korea to offer such arrangements.
A specialized team composed of blockchain and digital asset experts has been researching payment systems, remittances, and stablecoin services.
This entity has already carried out technical proof-of-concept projects in these fields and is currently collaborating with external technology companies to develop integrated wallets.
The proposed service will integrate traditional bank accounts with digital asset wallets into a single user interface, allowing customers to use both types of services through one platform.
Other financial institutions in South Korea are also advancing related infrastructure projects.
In August this year, BitGo Korea was registered with South Korea's financial intelligence agency, allowing it to develop regulated cryptocurrency custody and transfer services for institutional and corporate clients.
Hana Financial Group holds a 25% stake in BitGo Korea, while SK Telecom holds a 10% stake.
In September this year, Hana Bank signed an agreement with Upbit Global to jointly develop the Travel Rule infrastructure for digital asset transfers.
The cooperation between the two parties includes verification of remitters and recipients, sharing of secure transaction information, as well as technical connections between banks and registered cryptocurrency service providers.
BNP Bank plans to use the experience accumulated from its first batch of Bitcoin loan services to continue to improve collateral monitoring, valuation, and recovery procedures, in line with South Korea's ongoing efforts in digital asset legislation.
After evaluating operational experience, market demand, and future regulatory requirements, this line will consider whether to expand the range of eligible collateral assets and the purposes for loans.
