Circle has introduced a new borrowing service that lets institutional clients access USDC liquidity without selling their Bitcoin holdings. The initiative expands Circle’s role beyond stablecoin issuance and into institutional crypto finance.
Eligible Circle Mint customers can deposit Bitcoin and convert it into cirBTC. They can then use cirBTC as collateral across supported onchain lending markets.
Bitcoin Becomes Loan Collateral
Circle’s new Digital Asset-Backed Borrowing service currently supports Morpho on Arc and Ethereum. Circle plans to add Aave and other lending protocols as the service expands. Borrowed USDC moves directly into customers’ Circle Mint balances after they secure their loans.
Additionally, third-party lending markets determine interest rates, collateral requirements, and liquidation thresholds. Customers retain control of their collateral through wallets connected to those protocols. However, Circle excludes clients based in New York from the initial service.
Circle launched cirBTC on Ethereum in June before expanding the token to Arc. Circle National Trust holds the underlying Bitcoin and backs each cirBTC token one-to-one.
Institutional Crypto Lending Expands
The launch highlights growing demand for crypto-backed financing among institutional investors. Anchorage Digital previously enabled borrowing against staked Solana through Kamino. Moreover, Lombard and Bitwise developed Bitcoin lending infrastructure using Morpho.
Related: Strive Boosts Bitcoin Holdings to 26,355 BTC With $107.7 Million Purchase
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