Circle Launches Bitcoin-Backed USDC Borrowing for Institutions

Bitcoin-backed USDC borrowing — Circle has launched a Bitcoin-backed borrowing service for institutional clients, enabling them to use their BTC holdings as collateral to borrow USDC stablecoins without selling their Bitcoin.

The new Digital Asset-Backed Borrowing service allows eligible Circle Mint customers to deposit Bitcoin, which is then minted into Circle’s wrapped Bitcoin token, cirBTC. This token is supplied as collateral to third-party lending markets on the Arc or Ethereum blockchains, starting with the Morpho protocol. Borrowed USDC is deposited directly into the customer’s Circle Mint balance, with rates and collateral requirements set by the external lending market.

Circle emphasizes that the borrowing positions are overcollateralized and that collateral is supplied from a customer-controlled wallet to DeFi protocols, not lent directly by Circle. The service is not available to clients in New York. The launch coincides with cirBTC going live on Circle’s own layer-1 blockchain, Arc, which launched its mainnet days ago.

The move is part of a broader institutional trend toward crypto-backed lending within regulated custody frameworks. Earlier this year, firms like Anchorage Digital, Lombard, and BitGo launched similar services for staked Solana and Bitcoin, aiming to provide liquidity while assets remain in qualified custody.