Circle launches Bitcoin-backed USDC borrowing for institutional clients
Stablecoin issuer Circle has launched a Bitcoin-backed borrowing service for institutional clients, allowing eligible Circle Mint customers to use BTC as collateral to borrow USDC through onchain lending markets.
The service, called Digital Asset-Backed Borrowing, lets customers deposit Bitcoin, mint Circle’s wrapped Bitcoin token cirBTC and supply it as collateral to supported third-party lending markets on Arc or Ethereum. Morpho is the first lending protocol supported, with Circle planning to add Aave and other protocols. The rollout coincides with cirBTC going live on Arc on Monday.
According to Circle, borrowed USDC is deposited directly into the customer’s Circle Mint balance, while borrowing rates, collateral requirements and liquidation thresholds are set by the third-party lending market. The borrowing positions are overcollateralized, with collateral supplied through a customer-controlled wallet to third-party DeFi protocols rather than lent directly by Circle. New York clients are excluded.
Circle previously launched cirBTC on Ethereum in June. The token is backed 1:1 by Bitcoin held in custody by Circle National Trust.
Both launches come days after Circle rolled out the Arc mainnet, its layer-1 blockchain targeting stablecoin payments and financial markets. Arc uses USDC as its native gas token and supports tokenized assets including BlackRock’s BUIDL and Circle’s USYC.
Institutional crypto lending expands
Circle’s launch follows a broader push to give institutional investors access to crypto-backed borrowing while keeping collateral within established custody arrangements.
In February, Anchorage Digital partnered with Kamino to allow institutions to borrow against staked Solana (SOL) held at Anchorage Digital Bank, giving borrowers access to onchain liquidity without moving the collateral out of qualified custody.
Bitcoin-backed models followed in March, when Lombard partnered with Bitwise to develop a system for borrowing against BTC held in custody, with Morpho providing the lending infrastructure. Unlike Circle’s model, which converts deposited BTC into cirBTC for use as collateral, Lombard’s system was designed to keep the underlying Bitcoin in custody without wrapping or bridging it.
BitGo also expanded its institutional lending offering in March, launching a financing platform for borrowing and lending against liquid, staked and locked crypto assets held in custody. Its portfolio-based model allows multiple assets to serve as collateral rather than requiring collateral to be posted for individual loans.
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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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