Circle Launches Bitcoin-Backed USDC Borrowing for Institutions on Arc and Ethereum

Circle launched Digital Asset-Backed Borrowing for Circle Mint’s institutions, enabling these institutions to use BTC▲$77,666.00 as collateral against their USDC▼$0.9998 liquidity while remaining in control of their BTC rather than selling it. It was announced in a September 21 statement discussing Circle Mint’s support of several third-party decentralized lending markets on Arc and Ethereum.

Users who deposit native Bitcoin mint Circle Wrapped Bitcoin (cirBTC), which the institution moves to a user-controlled Smart Wallet, posts it as collateral on supported lending protocols, and borrows USDC against the collateral. The borrowed stablecoins are then automatically transferred from the wallet to the customer account at Circle Mint.

Morpho was the first lending protocol supported by the protocol at the time of launch. Circle states that others, including Aave, are expected to follow but has not announced if or when any will be added. The lending markets are over-collateralized, with interest rates, collateralization ratios, liquidation values, and liquidity set by each market.

Repayments are done the same way; customers can send USDC from Circle Mint into the Smart Wallet in order to pay back part or all of their debt. The debt is then reduced, and the collateral is freed according to the rules of the underlying protocol. Circle does not lend or control liquidations, however.