Circle turned on Digital Asset-Backed Borrowing in Circle Mint on September 21, letting eligible institutions borrow USDC against bitcoin without selling the coins — and without Circle writing the loan.
Customers deposit native bitcoin, mint Circle Wrapped Bitcoin, or cirBTC, one-for-one, and post that token as collateral on third-party onchain lending markets. Borrowed USDC lands in the Circle Mint balance. Circle does not extend the credit. cirBTC is backed one-for-one by bitcoin held at Circle National Trust, a federally chartered trust bank, with reserves checkable onchain. The wrapper, launched on Ethereum in June, also runs on Arc, Circle's stablecoin-focused layer-1, whose mainnet opened around September 16.
Morpho is the first market; Aave and others are expected later. Loan-to-value ratios, rates, and liquidation levels are set by those protocols, not by Circle. New York clients and retail users are excluded. Early Morpho figures on Arc showed utilization around 8 to 11 percent, with roughly $14 million to $19 million borrowed against hundreds of millions in liquidity and liquidation loan-to-value near 86 percent.
The product is a custody and wrapping franchise dressed as credit. Institutions that want bitcoin on the balance sheet and dollars in the operating account no longer have to sell. The default risk sits with Morpho's lenders. If liquidations work, Circle has turned a treasury asset into working capital. If they do not, the reputational hit will still land on the brand that minted the wrapper.
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