Circle Lets Institutions Borrow USDC Against Bitcoin Without Selling It

Circle has opened a new route for institutions that want dollar liquidity without selling the Bitcoin sitting on their balance sheets.

The company said eligible Circle Mint customers can now deposit BTC, mint Circle Wrapped Bitcoin, or cirBTC, and use that token as collateral to borrow USDC through supported third-party lending markets. The coordinated process is available on Arc and Ethereum.

That sounds simple. The important part is what has been compressed into one process.

Bitcoin does not natively plug into smart contracts. Institutions that wanted to borrow against it have typically had to choose a wrapped version, move assets between platforms and interact with a lending protocol.

They then had to manage settlement back to an operating account. Circle says its new Digital Asset-Backed Borrowing feature brings those steps into the Circle Mint environment.

The launch combines five actions: deposit BTC, mint cirBTC, choose a supported lending market, supply the wrapped Bitcoin as collateral and receive borrowed USDC in the customer’s Mint balance. Repayment sends the collateral back through the same coordinated route.

Circle says Morpho markets are supported at launch, while additional protocols are expected later. Arc gives customers a stablecoin-focused network, and Ethereum provides access to established onchain lending liquidity.

The company also stresses that Circle does not set the market’s interest rate, collateral requirement or liquidation threshold. Those terms depend on the third-party protocol and can move after a position is opened.

Every cirBTC is designed to represent one native Bitcoin held in reserve. Circle says those reserves can be verified onchain and that the underlying BTC is safeguarded through Circle National Trust.

Arc’s official account announced the network’s mainnet launch five days before the borrowing product arrived:

Arc Mainnet is live.

The Economic OS for the internet is online and onchain.

An open internet platform for the world's financial markets, real-time value movement, and agentic economic activity. pic.twitter.com/TjuNO2FtsE

— Arc (@arc) September 16, 2026

A customer deposits native BTC and mints cirBTC. The wrapped token is then supplied as collateral to a supported lending market.

The customer borrows USDC, which is returned to the Circle Mint balance. Repaying the USDC releases the cirBTC collateral.

The position is overcollateralized, so the credit decision is based on the collateral and the lending market’s parameters instead of traditional unsecured underwriting. Customers can add collateral or repay on their own schedule, but they also carry the usual onchain lending risks.

Circle says every cirBTC is backed one-for-one by native Bitcoin and that the reserves can be checked onchain. The underlying BTC is held through Circle National Trust, which the company describes as a federally chartered trust bank and qualified custodian.

Morpho is the first lending protocol integrated into the new borrowing route. Its announcement emphasized that Circle Mint customers can mint cirBTC, pledge it and borrow USDC on Arc or Ethereum without leaving the broader process.

Digital Asset-Backed Borrow in @circle Mint, powered by Morpho

Circle Mint customers can now deposit BTC & mint cirBTC, collateralize cirBTC, and borrow USDC on @arc or @ethereum, all in an integrated flow on the same platform they already use and trust. pic.twitter.com/nQgciaFHkp

— Morpho 🦋 (@Morpho) September 21, 2026

The cleaner interface reduces handoffs. The collateral can still be liquidated.

Borrowing rates, collateral requirements, liquidation thresholds and available liquidity are determined by the selected third-party market. Those conditions can change.

A sharp fall in Bitcoin’s value, an increase in borrowing costs or a shift in protocol parameters can force a borrower to add collateral or face liquidation.

Circle’s product terms also spell out smart-contract, oracle, liquidity, custody, wrapped-asset, governance and network risks. Once assets move from a Circle Mint balance into the user-controlled smart wallet and lending protocol, they no longer sit under the same controls that apply inside the Mint account.

The product is currently available only to eligible Circle Mint institutions, excludes New York clients and remains subject to jurisdictional limits. Circle says support for additional lending markets, including Aave, is expected as the service develops.

The launch gives corporate and professional holders another way to treat Bitcoin as working collateral instead of a passive treasury asset. A holder can maintain BTC exposure while drawing USDC for trading, settlement or treasury needs.

The move pushes Circle deeper into the full transaction stack. The company is connecting Bitcoin custody, a wrapped asset, smart-wallet controls, third-party credit markets and dollar settlement inside one institutional process.

That integration could make Bitcoin-backed borrowing easier to use. It also concentrates several layers of counterparty and technology risk into a process that may look deceptively smooth from the front end.

For institutions, the real question will not be whether borrowing against Bitcoin is possible. It will be whether the liquidity is deep, the terms remain competitive and the controls hold up when crypto markets turn volatile.

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