Circle Enables Institutions to Borrow USDC Against Bitcoin Without Selling BTC
Circle has introduced a new product called Digital Asset-Backed Borrowing (DABB) that allows institutions to borrow USDC, a stablecoin, against their Bitcoin holdings without selling their BTC. This is made possible through Circle Mint, a platform that enables clients to pledge BTC as collateral and receive USDC in return.
The process involves depositing BTC and minting Circle Wrapped Bitcoin (cirBTC), which is backed one-to-one by native BTC held in custody at Circle National Trust. The cirBTC can then be supplied as collateral through a wallet into a supported third-party lending market, where the borrower receives USDC directly to their Circle Mint balance.
Circle emphasizes that it does not set the loan terms and conditions, which are determined by the chosen market. This means that borrowing rates, collateral ratios, liquidation thresholds, liquidity, and availability can change over time. The company has partnered with Morpho as the first supported lending protocol, with plans to add others like Aave in the future.