Circle Has Launched USDC Loans Backed by Bitcoin Collateral on Circle Mint

• Clients can borrow USDC against BTC collateral without selling their bitcoin.
• At launch, DABB supports Morpho lending markets on the Arc and Ethereum networks.
• Each cirBTC is backed 1:1 by native bitcoin.

Circle has added the ability for eligible institutional Circle Mint clients to take out USDC loans backed by bitcoin. To do this, the company uses tokenized cirBTC, which can be posted as collateral on supported third-party lending markets.

The new feature is called Digital Asset-Backed Borrowing (DABB). It allows Circle Mint clients to use bitcoin as collateral to access USDC liquidity.

Within a single workflow, a client sends bitcoin to Circle and mints an equivalent amount of cirBTC. The token can then be posted as collateral on a supported third-party lending market via a client-controlled wallet.

Borrowed USDC is credited directly to the client’s Circle Mint balance. This way, a bitcoin holder does not need to sell the asset to access liquidity. To close the position, the client repays the borrowed USDC, after which their cirBTC collateral is released.

Circle notes that these positions are overcollateralized. Access is determined by collateral parameters and the specific lending market, rather than a traditional borrower underwriting process. At the same time, terms depend on the chosen market. Interest rates, collateral requirements, liquidation thresholds, liquidity levels, and availability may change.