Circle Now Lets Institutional Clients Borrow USDC Against Their Bitcoin
Key Takeaways
Circle launched a service letting institutions borrow USDC against bitcoin without selling BTC, using its wrapped token, cirBTC, as collateral.Loans are overcollateralized and run through third-party markets, currently only Morpho on Arc and Ethereum, with terms set by the market.Circle launched the Arc blockchain mainnet last week.
Circle, the company behind the USDC stablecoin, has launched a service that lets institutional customers borrow dollar-pegged tokens against their bitcoin holdings—the latest push by a crypto firm to court treasury departments that want liquidity without giving up their crypto.
The product, called Digital Asset-Backed Borrowing, or DABB, is now available to eligible Circle Mint customers, the company said. Clients based in New York are specifically ineligible, per the announcement.
Under the offering, customers deposit bitcoin and receive Circle wrapped bitcoin, or 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’s Bitcoin-Borrowing Playbook
Circle said the service consolidates steps that have historically been cumbersome. Bitcoin does not natively work with the smart contracts that power onchain lending across Ethereum and other networks, so borrowers have had to choose a wrapped version of BTC, move between platforms, and navigate protocol interfaces before settling funds back into an institutional account.
The loans are overcollateralized, meaning borrowers post more in value than they take out. Circle said access therefore 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, liquidation thresholds and availability are set by the lending market a customer selects and can change, the company said. Such thresholds typically determine when a position can be forcibly closed if the collateral loses value.
Morpho is the only lending protocol supported at launch, but Circle said it expects to add others, including Aave, over time. Circle’s service is offered via Ethereum and its own Arc blockchain, which launched its mainnet just 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, the company said. Because Circle does not operate a competing exchange or lending protocol, it argued, cirBTC is “strategically neutral.”
