Circle Launches Bitcoin-backed USDC Borrowing
BITmarkets Team
Sep 28, 2026
The service, called Digital Asset-Backed Borrowing, enables customers to deposit Bitcoin, mint Circle’s wrapped Bitcoin token cirBTC and use it as collateral on supported third-party lending markets operating on Arc or Ethereum. Morpho is the first supported lending protocol, while Circle plans to integrate Aave and additional protocols in the future. The launch coincides with cirBTC becoming available on Arc on Monday.
Circle brings Bitcoin-backed borrowing to institutions
Under the service, borrowed USDC is deposited directly into a customer’s Circle Mint balance. Interest rates, collateral requirements and liquidation thresholds are determined by the third-party lending market rather than Circle.
Borrowing positions are overcollateralized, with collateral supplied through customer-controlled wallets to third-party decentralized finance protocols. Circle itself does not directly lend against the collateral. The service is not available to clients in New York. Circle initially launched cirBTC on Ethereum in June. The token is backed 1:1 by Bitcoin held in custody by Circle National Trust.
Circle expands Arc financial ecosystem
The borrowing service and cirBTC expansion come shortly after Circle launched the mainnet of Arc, its layer-1 blockchain designed for 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. By bringing cirBTC to Arc and connecting it with onchain lending markets, Circle is expanding the range of institutional financial services available across its blockchain ecosystem.
Institutional crypto lending continues to grow
Circle’s launch follows a broader industry trend toward providing institutional investors with crypto-backed borrowing while maintaining established custody arrangements. In February, Anchorage Digital partnered with Kamino to allow institutions to borrow against staked Solana held at Anchorage Digital Bank, providing access to onchain liquidity without moving the underlying collateral out of qualified custody.
Bitcoin-backed lending expanded further in March when Lombard partnered with Bitwise on a system allowing institutions to borrow against BTC held in custody, with Morpho providing the lending infrastructure. Unlike Circle’s approach, which converts deposited Bitcoin into cirBTC for use as collateral, Lombard’s model was designed to keep the underlying BTC in custody without wrapping or bridging it.
BitGo also expanded its institutional lending services in March with a financing platform supporting borrowing and lending against liquid, staked and locked crypto assets held in custody. Its portfolio-based structure allows institutions to use multiple assets as collateral rather than assigning separate collateral to individual loans.
Sources:
https://www.circle.com/es/blog/digital-asset-backed-borrowing-is-now-available-in-circle-mint
