Circle launches Bitcoin-backed USDC borrowing for institutions

Circle announced a new institutional service that lets eligible customers deposit Bitcoin, mint Circle Wrapped Bitcoin (cirBTC), and borrow USDC through third‑party DeFi lending protocols. The workflow combines on‑chain collateralisation with Circle’s Mint interface, while the actual lending, liquidation and interest terms are set by the external protocol.

How the borrowing workflow works

1. An institution deposits native BTC into Circle Mint and receives an equivalent amount of cirBTC.2. The cirBTC is transferred to a user‑controlled smart wallet.3. The wallet posts cirBTC as collateral on a supported lending market (currently Morpho on the Arc network).4. USDC is borrowed and automatically moved back into the institution’s Circle Mint balance.5. Repayment follows the same path, releasing collateral according to the lending protocol’s rules.

Supported protocols and market data

The first protocol integrated is Morpho, operating on the Arc network. On the Arc cirBTC‑USDC market, the liquidation loan‑to‑value (LTV) threshold is 86%. At the time of verification, the market showed:

• $18.86 million borrowed
• $157.85 million available liquidity
• Total market size $176.71 million
• Utilisation 10.67%

Circle indicated that Aave and additional platforms will be added later, though no timetable was provided.

Reserve backing and custody

cirBTC is fully backed 1:1 by Bitcoin held by Circle’s Bermuda affiliate and the Circle National Trust. Public data shows cirBTC supply (≈948.75 cirBTC) is slightly lower than the Bitcoin reserves (≈951.26 BTC), confirming over‑collateralisation. The reserves are not lent, pledged, or rehypothecated, and Chainlink Proof of Reserve publishes the backing information on‑chain.

Regulatory and eligibility notes

The service is limited to eligible institutional customers; retail users cannot open standard Mint accounts. New York‑based institutions are excluded. Once assets move to the smart wallet, they are no longer under Circle Mint’s regulated custody, and Circle does not control liquidation events.

Broader context

Circle’s institutional USDC ecosystem is expanding, with recent partnerships such as BNY and Standard Chartered offering USDC minting, redemption, and custody services. The new borrowing product adds on‑chain credit options while keeping the underlying Bitcoin in custodial trust.