Circle Extends Institutional Crypto Lending with Bitcoin-Backed USDC Service

Circle has expanded its institutional crypto borrowing service by allowing eligible clients to post Bitcoin-linked collateral and receive USDC, a stablecoin. The new Digital Asset-Backed Borrowing service is overcollateralized, meaning that borrowers must deposit more than the loan amount, which is then converted into cirBTC, a wrapped token backed 1:1 by BTC held in custody by Circle National Trust.

The borrowed USDC is deposited directly into a customer's Circle Mint balance. The borrowing rates, collateral requirements, and liquidation thresholds are determined by the outside lending market, rather than Circle itself. This approach allows institutions to access crypto-backed liquidity without having to give up established custody arrangements.

Circle's move comes as the industry sees growing demand for institutional-grade crypto lending solutions. Other firms such as BitGo, Lombard, and Anchorage Digital are also offering similar services, with varying approaches to collateralization and borrowing structures.