Circle Introduces Bitcoin-Backed USDC Borrowing

Circle has introduced a new product that enables eligible Circle Mint institutions to deposit Bitcoin (BTC), mint cirBTC, and borrow USD Coin (USDC) through lending markets on Arc and Ethereum without selling their BTC. This structure converts deposited BTC into cirBTC, a token backed one-to-one by Bitcoin.

Institutions can hold cirBTC in a wallet they control and supply it as collateral in lending markets to obtain USDC liquidity. The Arc market for USDC backed by cirBTC showed $18.86 million in total borrowings, $157.85 million in liquidity, and a $176.71 million total market size at the time of data collection.

The liquidation loan-to-value ratio was 86%, with no executed liquidations and zero realized bad debt. The market listed Galaxy Curation and Keyrock as curators, with allocations including $76.62 million in a Galaxy USDC vault and $74.99 million in Keyrock Prime USDC.

Morpho is the first third-party lending protocol approved for this product. Aave plans to launch an Arc market, expanding the number of lending venues available to eligible institutions. Circle Mint access is currently limited to institutions and is unavailable to individuals.