Circle launches Bitcoin-backed USDC borrowing for institutional clients

Circle has introduced a new borrowing service that lets eligible institutional customers use Bitcoin as collateral to obtain USDC liquidity. The offering, called Digital Asset‑Backed Borrowing, is designed for Circle Mint users and operates through on‑chain lending markets.

How the service works

Clients deposit Bitcoin, which Circle converts into its wrapped Bitcoin token cirBTC. The cirBTC is then supplied as collateral to supported third‑party lending protocols on the Arc blockchain or Ethereum. The first protocol integrated is Morpho, with plans to add Aave and others.

Borrowing mechanics

• Borrowed USDC is transferred directly to the customer’s Circle Mint balance.
• Interest rates, collateral ratios and liquidation thresholds are defined by the chosen lending market.
• Positions are over‑collateralized and the collateral remains in a wallet controlled by the customer, not by Circle.
• New York‑based clients are excluded from the service.

Related product launches

Circle’s cirBTC token, launched on Ethereum in June, is backed 1:1 by Bitcoin held in custody by Circle National Trust. The token became available on Arc on the same day as the borrowing service rollout. Arc, Circle’s layer‑1 blockchain, uses USDC as its native gas token and supports tokenized assets such as BlackRock’s BUIDL and Circle’s USYC.

Industry context

Institutional crypto lending is expanding. Earlier in the year, Anchorage Digital partnered with Kamino to enable borrowing against staked Solana (SOL) held in custody. Lombard and Bitwise introduced a Bitcoin‑backed borrowing system using Morpho, while BitGo launched a financing platform that accepts multiple crypto assets as collateral.