Circle introduces institutional BTC-collateralized USDC lending program
Circle has introduced a Bitcoin-collateralized lending program for qualified Circle Mint users, enabling institutional investors to utilize BTC as collateral for obtaining USDC via onchain lending platforms.
Circle, the issuer of the USDC stablecoin, has unveiled a Bitcoin-collateralized lending service designed for institutional customers, enabling qualified Circle Mint users to leverage BTC as collateral for borrowing USDC via onchain lending platforms.
The new offering, dubbed Digital Asset-Backed Borrowing, enables clients to deposit Bitcoin, create Circle's wrapped Bitcoin token cirBTC, and provide it as collateral to compatible third-party lending platforms on Arc or Ethereum. Morpho has been designated as the initial supported lending protocol, with Circle indicating plans to integrate Aave and additional protocols in the future. The service's introduction aligns with the Monday launch of cirBTC on Arc.
Circle states that the borrowed USDC gets deposited straight into the client's Circle Mint account, with borrowing costs, collateral demands, and liquidation parameters determined by the third-party lending platform. The lending positions maintain overcollateralization, with collateral provided via a customer-controlled wallet to third-party DeFi protocols instead of being directly lent by Circle. Clients based in New York are not eligible for the service.
Circle had previously introduced cirBTC on Ethereum in June. The token maintains a 1:1 backing by Bitcoin stored in custody by Circle National Trust.
These launches arrive just days following Circle's deployment of the Arc mainnet, its layer-1 blockchain designed for stablecoin payments and financial markets. Arc utilizes USDC as its native gas token and provides support for tokenized assets such as BlackRock's BUIDL and Circle's USYC.
Institutional crypto lending expands
Circle's service debut is part of a wider industry movement to provide institutional investors with crypto-collateralized borrowing capabilities while maintaining collateral within approved custody frameworks.
In February, Anchorage Digital established a partnership with Kamino to enable institutions to secure loans against staked Solana (SOL) maintained at Anchorage Digital Bank, providing borrowers with onchain liquidity access without transferring the collateral outside of qualified custody.
Bitcoin-collateralized solutions emerged in March, when Lombard collaborated with Bitwise to create a framework for securing loans against BTC maintained in custody, with Morpho supplying the lending infrastructure. In contrast to Circle's approach, which transforms deposited BTC into cirBTC for collateral purposes, Lombard's framework was engineered to maintain the underlying Bitcoin in custody without the need for wrapping or bridging it.
BitGo similarly enhanced its institutional lending capabilities in March, introducing a financing platform for borrowing and lending against liquid, staked and locked crypto assets maintained in custody. Its portfolio-based approach permits multiple assets to function as collateral rather than necessitating collateral to be posted for separate individual loans.