Coinbase Unveils Bitcoin-Backed Loans: Borrow USDC Without Selling BTC

Coinbase has launched a Bitcoin-backed loan service that allows U.S. customers to borrow up to $100,000 in USDC by using Bitcoin as collateral.

This new offering is powered by the Morpho DeFi protocol on Coinbase’s Base network, enabling users to access liquidity without selling their Bitcoin and triggering capital gains taxes.

How It Works

To use the service, users convert their Bitcoin into a wrapped version, cbBTC, which is then used as collateral for the loan.

The loan offers flexible repayment terms and competitive interest rates, with automatic liquidation if Bitcoin’s value drops significantly. This service is available in most U.S. states, excluding New York.

Why It Matters

Coinbase aims to integrate decentralized finance (DeFi) with a user-friendly platform to enhance crypto lending services. This launch is a follow-up to a previous attempt in 2023, which was halted due to regulatory challenges.

By combining DeFi with its existing infrastructure, Coinbase hopes to capture a significant share of the growing crypto lending market, projected to reach $45 billion by 2030.

This service is part of Coinbase’s broader strategy to reshape personal finance by offering more flexible financial products that tap into the potential of blockchain and DeFi.