Circle launches Bitcoin-backed USDC borrowing via Morpho

Circle launched Digital Asset-Backed Borrowing on Arc and Ethereum on Sept. 21. Eligible Circle Mint institutions can deposit native Bitcoin, mint cirBTC, and supply it as collateral through a customer-controlled wallet. Borrowed USDC then settles into the customer's Circle Mint balance. Circle describes cirBTC as a tokenized claim backed by native Bitcoin. Circle Mint provides the account interface, while Morpho supplies the third-party lending market. The service excludes New York clients and remains subject to jurisdiction and eligibility requirements. The selected market determines borrowing costs, collateral limits, liquidation thresholds, available liquidity and availability. Morpho's documentation describes each market as a separate combination of loan asset, collateral, oracle, interest-rate model and liquidation loan-to-value limit. The interface does not remove the need to monitor collateral values, utilization and borrowing costs. A position can become liquidatable even when the underlying Bitcoin has not been sold because cirBTC is held in the lending market. A Sept. 21 snapshot of the Arc market for USDC loans against cirBTC showed an 86% liquidation loan-to-value limit. It displayed $14.13 million borrowed, $162.85 million in available liquidity, a $176.99 million market size and 7.98% utilization. At least one borrow appeared in that day's activity log. The figures show that the Arc market was operating, but they are a point-in-time snapshot and do not apply to Ethereum. Circle's reserve dashboard reported 948.75081803 cirBTC outstanding against 951.25857454 BTC in reserves as of Sept. 20. About 397 cirBTC was on Arc, and about 552 was on Ethereum. Arc is Circle's layer-1 network and is run by a permissioned validator set. The launch shortens the path from held Bitcoin to USDC, but it does not make the credit a fixed Circle loan. Lasting cirBTC demand will depend on continued borrowing activity and market terms after the launch-day snapshot.