Eligible Circle Mint institutions can now use Bitcoin to borrow USDC without selling the underlying asset, after Circle launched its Digital Asset-Backed Borrowing service on Arc and Ethereum on 21 September.
The service allows customers to deposit native BTC, convert it into Circle’s wrapped cirBTC token and use that token as collateral in a Morpho lending market. Once the borrowing process is completed, the USDC is credited to the customer’s Circle Mint balance.
Circle Mint provides the account interface, while cirBTC represents a tokenised claim backed by native Bitcoin. Morpho, a third-party lending protocol, supplies the market in which the borrowing takes place.
The new workflow brings the different stages of the transaction together, reducing the number of systems treasury teams must use when seeking dollar liquidity against Bitcoin holdings. However, it does not remove the financial risks associated with variable DeFi borrowing.
The service is available only to eligible institutions, excludes customers in New York and remains subject to jurisdictional and other eligibility requirements.
Circle coordinates the process, but the chosen Morpho market sets the borrowing rate, collateral requirements, liquidation thresholds and available liquidity. Morpho describes each market as having its own loan asset, collateral, price oracle, interest-rate model and liquidation loan-to-value limit.
That means institutions using the service must continue to monitor the value of their collateral, market utilisation and borrowing costs. A position can become eligible for liquidation even if the customer has not sold any Bitcoin, because the cirBTC is deployed inside the lending market.
A snapshot of the Arc market for USDC loans backed by cirBTC on 21 September showed a liquidation loan-to-value limit of 86%. The market had $14.13 million in outstanding borrowing, $162.85 million of available liquidity and a total market size of $176.99 million. Utilisation was 7.98%, and at least one borrowing transaction appeared in the activity log that day.
Those figures indicate that the Arc market was active at the time of the snapshot, but they represent only a single point in time and do not describe the Ethereum market.
Circle’s reserve dashboard showed 948.75081803 cirBTC outstanding against 951.25857454 BTC in reserves on 20 September. About 397 cirBTC was held on Arc, while approximately 552 was on Ethereum.
Arc is Circle’s layer-1 network and operates with a permissioned validator set, which is another consideration for institutions choosing between the supported networks.
The launch offers a shorter route from Bitcoin holdings to USDC liquidity, but the borrowing remains variable DeFi credit rather than a fixed Circle loan. Future demand for cirBTC will depend on borrowing activity and the terms available in the markets after the launch-day figures change.
