Circle Lets Institutions Borrow Against Their Bitcoin Without Saying Goodbye 💸

Circle has launched a Bitcoin-backed borrowing service for institutional clients, allowing eligible Circle Mint customers to post $BTC as collateral to borrow USDC through onchain lending markets. The product, called Digital Asset-Backed Borrowing, lets customers deposit Bitcoin, mint Circle's wrapped Bitcoin token cirBTC and supply it as collateral to supported third-party lending markets on Arc or Ethereum. Morpho is the first lending protocol supported, with Circle planning to add Aave and additional protocols later. Borrowing rates, collateral requirements and liquidation thresholds are set by the third-party lending market, and borrowed USDC is deposited directly into the customer's Circle Mint balance.

Borrowing positions are overcollateralized, with collateral supplied through a customer-controlled wallet to third-party DeFi protocols rather than lent directly by Circle. New York clients are excluded. According to Circle, each cirBTC is backed 1:1 by Bitcoin held in custody by Circle National Trust, with reserves verifiable onchain. The service launched in coordination with cirBTC going live on Arc on Monday. Circle previously launched cirBTC on Ethereum in June.

The release comes days after Circle rolled out the Arc mainnet, its layer-1 blockchain targeting stablecoin payments and financial markets. Arc uses USDC as its native gas token and supports tokenized assets including BlackRock's BUIDL and Circle's USYC.

The move expands Circle's institutional footprint beyond token issuance and follows a broader industry push to give institutions access to crypto-backed borrowing while keeping collateral within qualified custody. In February, Anchorage Digital partnered with Kamino to allow institutions to borrow against staked Solana ($SOL) held at Anchorage Digital Bank, giving borrowers access to onchain liquidity without moving collateral out of qualified custody. Bitcoin-backed models followed in March, when Lombard partnered with Bitwise to develop a system for borrowing against $BTC held in custody, with Morpho providing the lending infrastructure. Unlike Circle's model, which converts deposited BTC into cirBTC for use as collateral, Lombard's system was designed to keep the underlying Bitcoin in custody without wrapping or bridging it. BitGo also expanded its institutional lending offering in March, launching a financing platform for borrowing and lending against liquid, staked and locked crypto assets held in custody, with a portfolio-based model that allows multiple assets to serve as collateral rather than requiring collateral to be posted for individual loans.