Circle Unveils Institutional Borrowing Service Using Wrapped BTC Collateral
Circle has expanded its reach in institutional crypto finance with the launch of Digital Asset-Backed Borrowing, a new service that allows qualified customers to borrow USDC against their Bitcoin holdings without relinquishing custody. The platform, available through Circle's Mint platform, enables users to deposit Bitcoin and receive cirBTC, which is then supplied as collateral to third-party lending protocols.
The rollout coincides with the launch of cirBTC on Arc, a layer-1 blockchain designed for stablecoin payments and financial market use cases. The new service aims to address a recurring demand among institutional Bitcoin holders: access to leverage-like liquidity without disrupting existing custody arrangements or triggering taxable events through asset sales.
The borrowing structure works by allowing users to supply cirBTC as collateral on supported third-party lending protocols, such as Morpho, with borrowed USDC credited directly to their Circle Mint balance. Positions are overcollateralized, meaning borrowers must post more value in collateral than the amount of USDC they receive.
Circle's model reflects a custody-aware approach to institutional credit, emphasizing qualified custody and controlled collateral. The company plans to add Aave and other protocols to its supported lending platforms over time.