South Korea’s Jeonbuk Bank Begins Bitcoin Backed Corporate Loans As Authorities Block Access To Unregistered Platforms Including KuCoin, MEXC

South Korea’s digital asset sector is seeing two contrasting developments in quick succession. On one side, a regulated bank has launched the country’s first won-denominated loans secured by bitcoin for corporate borrowers.

On the other, financial authorities have expanded restrictions on unregistered virtual asset service providers, moving beyond mobile apps to block domestic access to the websites of 27 platforms, among them major offshore exchanges such as KuCoin and MEXC.

Jeonbuk Bank, a subsidiary of JB Financial Group, has started offering loans in Korean won collateralized by bitcoin.

The product is available only to corporate clients and is limited to funding ordinary business operating expenses such as payroll and supplier payments. Bitcoin is the sole asset accepted as collateral for the time being.

A specialized, registered virtual asset service provider holds the pledged coins under its custody framework; the bank itself does not take ownership or direct control of the bitcoin.

This structure keeps the lender within the bounds of existing banking rules.

In the event of default, recovery does not involve the bank seizing the coins. Instead, it proceeds through court-ordered sale procedures established under revised Civil Enforcement Rules that took effect on 1 October 2026.

Those rules set out steps for attaching and liquidating rights linked to virtual assets.

The bank selected bitcoin after conducting internal stress tests, citing its dominant market capitalization, deep liquidity, and reliable price discovery relative to other digital assets.

Valuation draws on a weighted-average index from multiple global exchanges rather than a single venue, and the bank has set internal standards for loan limits and collateral management to address price volatility.

At least one loan has already been executed, though the borrower has not been named.

Bank president Park Chun-won had earlier indicated interest in pioneering virtual-asset-backed lending as part of a broader “crypto bank” vision.

The institution also remains the only regional bank providing real-name deposit and withdrawal accounts to virtual asset exchanges.

Separately, the Financial Intelligence Unit (FIU) under the Financial Services Commission announced on 13 October that the Korea Communications Standards Commission had approved measures against 27 websites operated by unregistered virtual asset businesses.

Reviews took place on 6 and 7 October. Sites with domestic servers or operators face service termination, while overseas-hosted sites face domestic access blocks.

The list includes KuCoin, MEXC, Phemex, XT.com, Bitrue, BingX, BitMart, and others.

This expands earlier restrictions that already prevented new installations and updates of related mobile apps on Google Play and Apple’s App Store.

Under the Act on Reporting and Using Specified Financial Transaction Information, any virtual asset service provider targeting Korean users—whether through Korean-language interfaces, local marketing, or won-payment support—must obtain Information Security Management System certification and register with the FIU.

Operating without registration is a criminal offense punishable by up to five years in prison or a fine of up to 50 million won.

Authorities have emphasized preventive action, noting that unregistered operators fall outside the oversight regime of the Virtual Asset User Protection Act and related anti-money-laundering rules.

Risks cited include weaker user protections, potential data breaches or hacking, and possible use as channels for concealing criminal proceeds.

A survey by the Digital Asset Exchange Alliance previously found markedly higher average trading fees at some flagged unregistered platforms compared with the five major registered Korean won-based exchanges.

To date, 44 unregistered operators have been referred to investigative authorities.

Currently, 28 virtual asset businesses are lawfully registered with the FIU.

Users of affected platforms have been advised to withdraw assets promptly. The Digital Asset Exchange Alliance is available to guide those facing withdrawal difficulties.

Authorities plan to continue monitoring for alternative URLs and to apply similar reviews as new unregistered activity is identified.

The developments illustrate South Korea’s seemingly progressive approach: exploring controlled integration of bitcoin into conventional bank credit for businesses under existing law, while tightening barriers against platforms that have not completed the required domestic registration process.