Coinbase Locks the Rate: Borrow USDC Against BTC, Keep Your Stack 📊

Coinbase has rolled out fixed-rate, bitcoin-backed USDC loans through Morpho Midnight on Base, allowing users to borrow against their BTC holdings without selling, with interest rates and repayment dates set at the time of origination. The new product sits alongside Coinbase's existing variable-rate lending business, which runs on Morpho Blue and now holds more than $1.4 billion in active loans backed by roughly $3 billion in collateral, according to Morpho.

Morpho Midnight is a decentralized, non-custodial lending protocol designed for fixed-rate and fixed-term crypto loans, launched on Base in July. Coinbase handles the customer experience through its app, Morpho provides the lending infrastructure, and Base settles transactions. "Coinbase Borrow gives our customers access to liquidity without having to sell their assets, and fixed-rate borrowing gives them even greater choice over how they manage that credit," Coinbase yield and investments product lead Jacob Frantz said.

The move departs from the variable-rate model that has dominated on-chain lending, where borrowing costs float with market conditions and can climb unpredictably. Morpho's co-founder and CEO Paul Frambot said the partnership is now focused on scaling. "We're now building on that foundation and starting to scale: new loan types and use cases, bringing onchain credit one step closer to the scale and diversity of global credit markets," he said on X. Morpho Midnight currently holds $30 million in deposits, while Morpho Blue has $16 billion across integrations.

Coinbase first launched BTC-backed borrowing on Base in early 2025, relying on Morpho as its technology provider, and has since expanded accepted collateral beyond Bitcoin to assets including XRP and Dogecoin. The lending push has not been without turbulence; a sharp drop in BTC and ETH prices in February drove record liquidations across Coinbase's loan book, underscoring the risk that comes with borrowing against volatile collateral. Coinbase shares COIN closed at $198.13, while BTC traded at $84,473.05.

The broader bitcoin-backed credit market is currently sized at roughly $16 billion, according to the Bitcoin Digital Credit Report compiled by Apyx and BitcoinTreasuries.net, with some estimates projecting growth to $130 billion by 2030 as preferred equity structures scale. Fixed-rate, BTC-backed loans have existed for years through lenders such as Ledn and SATL Lending, but Coinbase's offering stands out for running onchain via a DeFi protocol inside a mainstream consumer app. Morpho said the protocol is designed to eventually support tokenized stocks and other real-world assets beyond bitcoin collateral.