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Crypto exchange Coinbase COIN has launched a new service allowing U.S. customers (excluding in the state of New York) to borrow USDC/USD against their Bitcoin holdings.
This new offering allows users to access liquidity without selling their Bitcoin, providing instant loans with 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, offering 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. In under a minute, you can get a loan in USDC without ever having to sell your bitcoin,” the company stated.
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.
Also Read: Bitcoin Consolidates Around $99,000 After $750 Million ETF Inflows On Wednesday
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, while users can monitor their loan status via the Coinbase app.
Users will be subject to liquidation if the loan amount, including accrued interest, reaches a predetermined level compared to their collateral value.
Coinbase emphasizes the benefits of borrowing against Bitcoin rather than selling it, citing potential tax advantages in delaying capital gains or losses.
The launch of these Bitcoin-backed loans marks another step in Coinbase’s effort to empower customers with “greater control over their financial lives,” according to Coinbase.
By combining the accessibility of Coinbase with the transparent, decentralized features of on-chain protocols, the company aims to offer “vastly improved financial services.”
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