Coinbase Launches New Service Allowing US Customers to Borrow USDC/USD Against Their Bitcoin Holdings

Cryptocurrency exchange Coinbase (NASDAQ:COIN) has now launched a new service that allows U.S. customers (except those in New York) to borrow USDC/USD against their Bitcoin holdings.

This new offering enables users to access liquidity without having to sell their Bitcoin, with instant loans, flexible repayment terms, and competitive interest rates, powered by Morpho, an open-source lending protocol on Coinbase’s Layer-2 blockchain, Base.

The loans are disbursed instantly in USDC, with flexible repayment options and competitive interest rates set dynamically by Morpho’s open market lending pool.

“Getting a Bitcoin-backed loan on Coinbase is now easier and faster than ever,” the company said. “In under a minute, you can get a loan in USDC without ever having to sell your bitcoin.”

This development aims to bridge the gap between holding crypto assets for the future and accessing funds for immediate needs.

When a user borrows USDC against their Bitcoin, the collateral is automatically converted to Coinbase Wrapped Bitcoin (cbBTC) on a 1:1 basis and transferred to the Morpho protocol.

This cbBTC, which was launched in September to allow customers to move and use their Bitcoin on-chain, remains within the Coinbase ecosystem while being used as collateral.

Users can borrow up to $100,000 USDC, depending on the amount of Bitcoin they pledge as collateral.

The interest rates are variable and adjusted in real-time by Morpho based on market conditions, changing dynamically with each block creation on the Base blockchain.

The loan terms offer users flexibility in repayment, with no fixed repayment schedule, and users can monitor their loan status via the Coinbase app.

Users will be liquidated if the loan amount, including accrued interest, reaches a predetermined level compared to their collateral value.

Coinbase highlights the benefits of borrowing against Bitcoin rather than selling it, including potential tax advantages in delaying capital gains or losses.

The launch of these Bitcoin-backed loans marks another step in Coinbase’s mission to give customers “greater control over their financial lives,” according to Coinbase.

By merging the accessibility of Coinbase with the transparent, decentralized aspects of on-chain protocols, the company aims to provide “vastly improved financial services.”

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