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 via the onchain transaction market.
D serviceCalled Digital Asset-Backed Borrowing, it allows customers to deposit Bitcoin, Mint Circle’s wrapped Bitcoin token ServiTC, and offer it as collateral in third-party loan markets backed by Arc or Ethereum. Morpho is the first lending protocol supported, Circle plans to add Aave and other protocols. The rollout coincides with the departure of cirBTC the bus Monday at Ark.
According to Circle, borrowed USDC is deposited directly into the customer’s Circle Mint balance, while lending rates, collateral requirements and liquidation thresholds are set by third-party lending markets. Borrowing positions are overcollateralized, collateralized through customer-controlled wallets on third-party DeFi protocols rather than direct lending by Circle. New York clients are excluded.
Circle previously launched cirBTC on Ethereum in June. The token is backed 1:1 by Bitcoins in custody of the Circle National Trust.
Both launches come days after Circle launched the Arc Mainnet, its layer-1 blockchain stablecoin targeting payments and financial markets. Arc uses USDC as its native gas token and supports tokenized assets including BlackRock’s BUIDL and Circle’s USYC.
Source: the circle
Institutional crypto lending expands
Circle’s launch follows a larger push to give institutional investors access to crypto-backed loans and draws parallels between established custody systems.
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 collateral out of eligible custody.
Bitcoin-backed models followed in March, when Lombard partnered with BitWise to build a system for borrowing against custodial BTC, with Morpho providing the lending infrastructure. Unlike Circle’s model, which converts deposited BTC to SerbitC for use as collateral, Lombard’s system was designed to hold the underlying bitcoins in custody without wrapping or bridging.
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 without requiring collateral to be posted for individual loans.
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