Circle Adds Bitcoin-Backed USDC Borrowing to Circle Mint

Key Facts

Circle has made Digital Asset-Backed Borrowing available to eligible institutional Circle Mint clients on Arc and Ethereum. The service lets clients use Bitcoin as collateral to borrow USDC through supported third-party lending markets, providing liquidity without selling the Bitcoin supporting the position.

The workflow begins with depositing BTC and minting cirBTC, a wrapped asset backed 1:1 by Bitcoin reserves. The client moves cirBTC to a user-controlled smart wallet, supplies it as collateral in a supported market and receives the borrowed USDC in its Circle Mint balance; repaying the debt releases the collateral under the protocol's rules.

Circle says the open-ended positions are overcollateralized and that the selected market sets borrowing rates, collateral requirements, liquidation thresholds and liquidity. Morpho was the first supported lending protocol at launch. The central risk mechanism is that a decline in Bitcoin reduces the collateral value relative to the USDC debt, potentially pushing the position past its liquidation threshold even though the client did not voluntarily sell the Bitcoin.

Circle's terms state that assets moved from a Circle Mint account into the smart wallet are no longer held in that Circle Mint account, while borrowing and liquidation occur through third-party protocols that Circle does not control. New York clients are excluded, and access remains subject to jurisdiction and eligibility. Circle says support for Aave will follow.