January 19, 2025
Coinbase Launches Bitcoin-Backed Loan Service Allowing Users to Borrow Up to 0,000 in USDC
 #CriptoNews

Coinbase Launches Bitcoin-Backed Loan Service Allowing Users to Borrow Up to $100,000 in USDC #CriptoNews

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Coinbase, in partnership with Morpho Labs, has launched a Bitcoin-backed loan service, allowing U.S. users to borrow up to $100,000 in USD Coin (USDC) using their Bitcoin as collateral.

Coinbase, in partnership with Morpho Labs, has launched a Bitcoin-backed loan service, allowing U.S. users to borrow up to $100,000 in USD Coin (USDC) using their Bitcoin as collateral. This service, available to all U.S. residents except those in New York, operates on Base, Coinbase’s Ethereum layer-2 network. Borrowers must overcollateralize their loans, with Bitcoin collateral automatically converted into Coinbase Wrapped Bitcoin (cbBTC), a token backed 1:1 by Bitcoin held in Coinbase custody. The cbBTC is then transferred to Morpho, which manages the loan terms and interest rates dynamically.
The loans are intended to offer users liquidity without selling their Bitcoin and incurring taxable events. Coinbase’s Vice President, Max Branzburg, emphasized that the product is designed to enhance the utility of Bitcoin within a decentralized framework. Coinbase does not directly issue the loans but facilitates the process, allowing borrowers to access funds without credit checks or fees. The repayment terms are flexible, although borrowers must monitor their collateral value to avoid liquidation.
Bitcoin-backed loans have become increasingly popular among investors seeking to maintain their holdings while accessing liquidity. According to HFT Market Intelligence, the market for crypto-backed loans is projected to grow from $8.5 billion in 2024 to $45 billion by 2030. With Bitcoin’s adoption expanding, institutions and DeFi protocols are increasingly exploring crypto lending opportunities. Competitors like Ledn have also seen rising interest in similar products.
Morpho, ranked as the 12th-largest decentralized application with $3.2 billion in total value locked, plays a key role in this collaboration. Its platform enables seamless management of interest rates and ensures loan security. Coinbase launched cbBTC in September 2024 to facilitate Bitcoin’s integration into DeFi, a move that has already seen over $2.1 billion in supply, according to Dune Analytics.

This initiative also highlights the tax-efficient potential of crypto-backed loans. Borrowed USDC can be converted to U.S. dollars without additional fees, bridging the gap between decentralized and traditional financial systems. Coinbase’s return to Bitcoin lending follows its discontinuation of the Borrow program in November 2023 and demonstrates its growing focus on decentralized finance tools.

By integrating crypto lending with DeFi platforms like Morpho, Coinbase aims to expand Bitcoin’s utility and create new financial opportunities for its users. As the market for Bitcoin-backed loans grows, such services could help significantly shape the future of crypto lending and decentralized finance.

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