Circle launches Bitcoin-backed USDC borrowing for institutional clients
Reported by Cointelegraph · AI-assisted summary by ChikoCorp AI News Desk
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Summary
Circle has launched a Bitcoin-backed borrowing service called Digital Asset-Backed Borrowing for institutional clients who are eligible Circle Mint customers. This service allows users to deposit Bitcoin, mint Circle’s wrapped Bitcoin token cirBTC, and use it as collateral to borrow USDC through supported third-party lending markets such as Morpho, with plans to add Aave and others. Borrowed USDC goes directly into the customer's Circle Mint balance, and borrowing terms are set by external lending markets. New York clients are excluded from this service.
Why it matters
The launch provides institutional investors access to crypto-backed borrowing via onchain lending markets while maintaining collateral within custody arrangements. It coincides with the rollout of Circle's Arc mainnet, which targets stablecoin payments and financial markets, potentially expanding stablecoin utility and liquidity options for institutions.
Key context
Circle previously launched cirBTC on Ethereum in June, backed 1:1 by Bitcoin held in custody. The new borrowing service operates by wrapping BTC into cirBTC, which is then supplied as collateral on third-party DeFi platforms rather than lending BTC directly. This model differs from other institutional borrowing solutions such as Lombard’s BTC custody lending system, which does not wrap or bridge Bitcoin.
Key numbers and entities
Circle, Bitcoin (BTC), USDC, cirBTC, Morpho (first lending protocol supported), Aave (planned), Arc mainnet, Circle Mint, Circle National Trust, New York clients (excluded). No specific financial figures are provided.
What remains unclear
The article does not specify the exact borrowing rates, collateral requirements, or liquidation thresholds for the new service, as these depend on third-party protocols. It is also unclear how quickly Circle plans to integrate additional lending protocols beyond Morpho and Aave. Detailed user eligibility criteria beyond being a Circle Mint customer are not provided.