Circle has launched a lending service that lets institutional clients borrow USDC against their bitcoin without selling it. The product wraps client bitcoin into a Circle-issued token, cirBTC, which then serves as collateral on third-party lending markets, currently only Morpho.
Circle, the issuer of the stablecoin USDC, launched a service on Monday that lets institutional customers borrow USDC against their bitcoin holdings, giving treasury departments liquidity without forcing them to give up their crypto. The product, called Digital Asset-Backed Borrowing, is now available to eligible Circle Mint customers, though clients based in New York are ineligible.
How the borrowing mechanism works
Under the offering, customers deposit bitcoin and receive cirBTC, a token Circle says is backed one-to-one by the underlying coin. They then supply the cirBTC as collateral in a third-party lending market, through a wallet they control, and borrow USDC, which is credited to their Circle Mint balance. Repaying the loan releases the collateral.
Circle said the service consolidates steps that have historically been cumbersome, since bitcoin does not natively work with the smart contracts that power onchain lending. Borrowers previously had to choose a wrapped version of BTC, move between platforms, and navigate protocol interfaces before settling funds back into an institutional account.
Overcollateralized loans through Morpho
The loans are overcollateralized, meaning borrowers post more in value than they take out. As a result, Circle said access depends on collateral and market rules rather than traditional credit underwriting, and customers can add collateral or repay on their own schedule. Borrowing rates, collateral requirements, and liquidation thresholds are set by the lending market a customer selects and can change.
Morpho is the only lending protocol supported at launch, but Circle said it expects to add others, including Aave, over time. The service runs on Ethereum and Circle's own Arc blockchain, which launched its mainnet last week.
Circle also pitched cirBTC as institutional-grade collateral: the underlying bitcoin is held by Circle National Trust, a federally chartered trust bank and qualified custodian, and reserves can be verified onchain. Because Circle does not operate a competing exchange or lending protocol, the company described cirBTC as "strategically neutral."
Source: Circle
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