Say you bought Bitcoin years ago and the position is well in the green. You need cash for a business expense, but selling would mean a tax bill and a smaller stack. A loan against the coins looks like the neat way out. Whether it is depends on the fine print, and South Korea just gave us a fresh example of what that fine print can look like.
What Jeonbuk Bank started on Oct. 12
Jeonbuk Bank began issuing won loans to corporate clients with Bitcoin as collateral. It is the first commercial bank in South Korea to do so. The product is tightly fenced. Only registered corporate customers can apply, Bitcoin is the only accepted collateral, individuals are shut out, and the money is limited to operating costs.
The bank never holds the coins. A registered third-party custodian does. If a borrower defaults, the bank can go through a court-ordered sale. That route rests on amended Civil Enforcement Rules, which took effect Oct. 1 and set out how claims tied to virtual assets are seized and liquidated. To price the collateral, the bank uses an index built from a weighted average across several global exchanges.
A bank official told Jaekyung Ilbo that one loan has already been executed, but the borrower was not named.
Wall Street has a close cousin. JPMorgan launched a program in March 2026 that lets institutional clients pledge Bitcoin and Ethereum for dollar loans through its Kinexys platform. Fidelity Digital Assets and Coinbase Custody hold the tokens, and retail investors are excluded.
How much cash can you get?
Everything starts with loan-to-value, or LTV. It is your loan balance divided by the market value of your collateral. Chainflip's guide puts typical starting LTVs for Bitcoin loans at 30% to 60%, with liquidation thresholds between 70% and 80%. At a 50% LTV, $10,000 of Bitcoin gets you $5,000.
Lenders set their own dials. Ledn caps LTV at 50%, charges 9.25% to 11.49% APR and runs no credit checks. Coinbase opens loans at about 75% and liquidates at 86%. Banks tend to use a haircut instead. JPMorgan's haircuts are estimated at 30% to 50%, which would mean $100,000 of pledged Bitcoin may bring in only $50,000 to $70,000.
Where the liquidation lines sit
Warning systems differ from one lender to the next. Ledn sends alerts at 70% and 75% LTV, then starts automatic partial liquidation at 80%. Strike triggers a margin call at 70% and gives you 72 hours to add collateral or repay. If you miss that window, it sells enough to bring LTV back to 65%. Coinbase's Morpho-based loans liquidate the whole position and add a penalty fee.
The risks that don't show up in the rate
Bitcoin is not a calm collateral. It trades about 24.5% below its price a year ago and 35% below its all-time high. On Oct. 10, 2025, it dropped from about $122,000 to $105,000, and roughly $19 billion in positions were liquidated. Most of those were derivatives trades, not loans. A fall of that size would still have pushed a 70% LTV borrower close to the lines above.
Then there is the lender. The 2022 collapses of BlockFi and Celsius, among others, wiped out about $11 billion in customer funds. Their models leaned on rehypothecation, poor liquidity management and overleveraged bets inside an opaque structure. Spark's comparison lists Ledn collateral as ring-fenced and SALT as allowing rehypothecation. Read each lender's terms for that clause before you send any coins.
Taxes work in a way many borrowers don't expect. Taking out the loan is not a taxable event, because you haven't disposed of your crypto. A forced liquidation is a taxable disposal, even though you never see the proceeds. That guidance is written for U.S. borrowers. Korean borrowers should ask their own tax adviser how the new corporate loans are treated.
Matvii Diadkov
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