Circle Opens Bitcoin-Backed USDC Borrowing to Institutional Clients

On September 21, Circle made a borrowing product called Digital Asset-Backed Borrowing available to eligible customers of Circle Mint, its institutional platform for issuing and redeeming the USDC stablecoin. Customers deposit bitcoin, receive cirBTC, a token backed one to one by that bitcoin, and pledge the token in a third-party lending market to borrow USDC. The borrowed dollars arrive in the customer's Circle Mint balance.

How the product works

Circle describes five steps. The customer deposits BTC and mints cirBTC, selects a supported lending market, supplies cirBTC as collateral and borrows USDC, receives the USDC in Circle Mint, and repays the USDC to release the collateral.

The positions are overcollateralized and have no fixed term. According to Circle, customers can add collateral or repay on their own schedule, and access depends on collateral and market parameters rather than on traditional credit underwriting.

Circle does not lend. Interest rates, collateral requirements, liquidation thresholds and available liquidity are set by the chosen lending market and can change. At launch the only supported market is Morpho, an onchain lending protocol. Circle says Aave and other protocols will follow. In the same announcement, Circle discloses a commercial relationship with Morpho.

The position runs through a smart wallet controlled by the customer and provided by Circle Technology Services. The product is available on Ethereum and on Arc, the blockchain Circle built for stablecoin payments.

Who can use it

Circle Mint is available only to institutions, not to individuals. Customers in New York are excluded, and availability depends on jurisdiction and eligibility.

What the collateral is

The asset that sits in the lending market is cirBTC, not bitcoin. Circle launched cirBTC on Ethereum on June 8, 2026. The token is issued by Circle International Bermuda Limited, which is licensed by the Bermuda Monetary Authority. The bitcoin backing it is held by Circle National Trust, a national trust bank chartered by the Office of the Comptroller of the Currency. Circle states that the reserves can be independently verified onchain.

Context

The structure follows a model Coinbase introduced for retail customers in January 2025. There, a customer's bitcoin is converted into Coinbase's own wrapped token, cbBTC, and moved into a Morpho market. Coinbase requires at least 133% collateral and liquidates when the loan, including accrued interest, reaches 86% of the collateral's value. Coinbase states on its product page that it cannot prevent a liquidation on Morpho.

Circle's product brings the same pattern to institutional clients, with Circle's own token, custodian and blockchain. How this model compares with custodial and multisig loans, and what the 2025 to 2026 drawdown revealed about each of them, is the subject of our analysis of bitcoin-backed lending.