Circle Lets Institutions Borrow USDC Against Bitcoin Through Morpho

Circle began letting institutional clients borrow USDC against their bitcoin on Monday, 21 September, without selling the coins. The product, called Digital Asset-Backed Borrowing, runs through Circle Mint for eligible institutional customers. A client deposits bitcoin, receives cirBTC, a wrapped token backed one-to-one, and posts it as collateral in an onchain lending market. The borrowed USDC lands in the client's Mint balance. Morpho is the only lending protocol at launch, and clients in New York are excluded.

Circle runs the pipes, Morpho sets the terms

The rates are not Circle's. Neither is the collateral limit. Those terms, and the liquidation point, come from whichever market the client picks, and Circle has not published loan-to-value ratios or interest ranges, Altcoin Buzz noted. Loans are overcollateralized, meaning the bitcoin posted is worth more than the dollars borrowed. There is no credit underwriting in the traditional sense, news.bitcoin.com wrote on Monday evening. Repayment runs through the same interface, and a client gets its collateral back by paying off the USDC balance.

"The selected market determines borrowing costs, collateral limits, liquidation thresholds, available liquidity, and availability," Circle says, in wording CryptoSlate quoted on Monday.

crypto.news spells out where the risk sits. Once cirBTC moves into the client's smart wallet it leaves Mint's regulated environment, and third-party protocols handle lending, collateral and liquidation. Circle plans to add Aave and other markets later. The bitcoin behind cirBTC is held by Circle National Trust, a federally chartered trust bank since its final OCC approval in July.

Three snapshots of one market

The early numbers move by the hour. On Arc, Circle's new Layer 1, the cirBTC and USDC market on Morpho had $14.13 million borrowed and $162.85 million available in a 21 September snapshot published by CryptoSlate. The Defiant put borrowing at $14.3 million against 287 cirBTC. By early Tuesday UTC, crypto.news had $18.86 million borrowed and $157.85 million available. The figures do not reconcile. None of the outlets gives an exact time for its reading, and a market this new changes quickly. Two numbers do agree. CryptoSlate and crypto.news both put the liquidation loan-to-value at 86% and cirBTC supply at about 948.75 tokens. crypto.news adds that 951.26 bitcoin sit in reserve behind them. CryptoSlate alone gives a split of roughly 397 cirBTC on Arc and 552 on Ethereum, along with a utilization rate near 8%. The Defiant says the Arc market held $1.37 million of loans on 17 September, before the formal launch. We found that figure nowhere else.

Built on the Arc launch

cirBTC first went live on Ethereum in June and was deployed on Arc on Monday. The borrowing product runs on both chains. Arc itself opened its mainnet with USDC as the gas token the week before. Cointelegraph notes that the chain already carries tokenized assets such as BlackRock's BUIDL and Circle's own USYC. For a borrower the appeal is simple. The bitcoin stays on the balance sheet and is never sold into the spot market, as Altcoin Buzz put it. The Defiant reports that Galaxy and Keyrock supply nearly all of the USDC in the Arc market, a detail no other account carries. Circle's own pitch fits in three short lines: "Deposit BTC. Mint cirBTC. Borrow USDC."

Circle has not said why New York is excluded. It has not dated the Aave integration either. The Arc market's size is public on-chain, and Circle has published no target for it.