Circle launches institutional Bitcoin-backed USDC borrowing

The service, dubbed Digital Asset-Backed Borrowing, integrates the process of converting native BTC into onchain collateral and depositing it into smart-contract lending protocols. Morpho serves as the inaugural lending partner, with integration for Aave and other platforms expected to follow. Eligible institutions can manage the entire cycle—from collateralizing their BTC to receiving borrowed USDC—within their Circle Mint account environment.

While Circle provides the interface and Smart Wallet technology, the company emphasizes that it does not act as the lender. Borrowing terms, interest rates, and liquidation thresholds are governed entirely by third-party DeFi protocols. Once assets move from the regulated Circle Mint environment into a user-controlled Smart Wallet, they fall outside Circle’s direct custody. Consequently, borrowers assume full responsibility for managing their positions, including the risk of automatic liquidation if collateral values fluctuate.

Institutional data currently shows a robust backing for the new asset, with cirBTC reserves exceeding the circulating token supply. As of late September, Circle reported roughly 951 BTC in reserves against 948 cirBTC tokens. These reserves are held by the Circle National Trust, which operates under a federal charter from the Office of the Comptroller of the Currency. While this structure allows for transparent verification via Chainlink Proof of Reserve, the service remains restricted for certain entities, with New York-based customers currently excluded from participation.