Circle launches Bitcoin-backed USDC borrowing, leaving liquidation risk with Morpho protocol

Eligible Circle Mint institutions can now deposit Bitcoin, turn it into wrapped cirBTC collateral, and borrow USDC through a Morpho lending market in one coordinated workflow.

Circle made the service live on Arc and Ethereum on Sept. 21, reducing the number of systems a treasury team must navigate to raise dollar liquidity without selling its Bitcoin.

The service remains limited to eligible institutions, excludes New York clients, and is subject to jurisdiction and eligibility. Circle Mint is the account interface, cirBTC is Circle's tokenized claim backed by native Bitcoin, and Morpho supplies the third-party lending market.

Under Circle's Digital Asset-Backed Borrowing service, customers deposit native BTC, mint cirBTC, and supply the token as collateral through a customer-controlled wallet. Borrowed USDC then settles into the customer's Circle Mint balance.

Circle coordinates the experience, but the selected market determines borrowing costs, collateral limits, liquidation thresholds, available liquidity, and availability. Morpho's documentation describes each market as its own combination of loan asset, collateral, oracle, interest-rate model, and liquidation loan-to-value limit.

For a treasury team, the streamlined interface does not remove the need to monitor collateral values, utilization, and borrowing costs. A position can become liquidatable even though the underlying Bitcoin was never sold, because cirBTC sits in the lending market.