Circle launches Bitcoin-backed USDC borrowing for institutions

Circle has launched Digital Asset-Backed Borrowing for eligible Circle Mint institutional customers. The service allows customers to deposit Bitcoin, mint Circle’s wrapped Bitcoin token cirBTC and supply it as collateral to supported third-party lending markets on Arc or Ethereum to borrow USDC without selling their Bitcoin. Morpho is the first supported lending protocol, and Circle plans 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. The third-party lending market sets borrowing rates, collateral requirements and liquidation thresholds. Borrowing positions are overcollateralized, and collateral is supplied through a customer-controlled wallet to third-party DeFi protocols rather than lent directly by Circle. New York clients are excluded. Circle launched cirBTC on Ethereum in June, and the token is backed 1:1 by Bitcoin held in custody by Circle National Trust. The launch follows Circle’s rollout of the Arc mainnet, a 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. The article describes the service as part of a broader expansion of institutional crypto-backed borrowing. In February, Anchorage Digital partnered with Kamino to let institutions borrow against staked Solana held at Anchorage Digital Bank while keeping the collateral in qualified custody. In March, Lombard partnered with Bitwise on a system for borrowing against BTC held in custody, with Morpho providing the lending infrastructure. That system was designed to keep the underlying Bitcoin in custody without wrapping or bridging it. BitGo also launched a financing platform in March for borrowing and lending against liquid, staked and locked crypto assets held in custody. BitGo’s portfolio-based model allows multiple assets to serve as collateral rather than requiring collateral for individual loans.