Jeonbuk Bank lends won to a company against Bitcoin that a custodian holds

The structure shifts the bank's exposure from custody operations to valuing the collateral and recovering cash from its sale. Jeonbuk says it would recover a defaulted loan from sale proceeds and would not take Bitcoin into its own wallet ^[6], and, as crypto.news puts it, the bank need not operate Bitcoin keys or execute blockchain transfers from its own systems ^[11]. The spend goes to a valuation index and a legal route instead, and the source gives no basis to assume another token will be added or that households can apply ^[14].

Take the 30% fall that crypto.news uses as its test case ^[13]. Bitcoin traded around $83,500 on CoinGecko's October 12 page ^[7], so a 30% fall puts it near $58,450 ^[15]. At that price the collateral is worth 70% of its starting value, so a loan written at an initial loan-to-value of 70% would just equal it, and any higher starting ratio would be underwater before sale costs ^[16]. (The 70% line is our threshold for that scenario, not a bank term.) Jeonbuk says it stress tested a sharp decline ^[17]. It did not disclose the initial limit, the margin trigger, the grace period or the sale timeline ^[8], so there is no way to tell which side of the line the loan sits.

The index determines when the bank calls for more margin. What the bank recovers depends on the sale price. Under South Korea's revised civil enforcement procedure, a claim to virtual assets can be seized and sold once a borrower defaults ^[2]. The procedure sets no time limit for that sale, and a court-supervised sale in a falling market is the step the bank has not shown it can run at speed.

We think the pilot proves origination and little else. Until a loan is margin-called, nothing shows that a supervised sale clears near the index price.

The first loan may be small enough that no term is ever tested (its size is not known ^[3]). The starting limit may be conservative and Bitcoin may hold. Or a drawdown arrives and the enforcement route is used for the first time. Only the third answers the bankability question. We would be wrong if Jeonbuk publishes a starting limit and trigger that fire well before the 70% line, because then the open item narrows to court timing.