TLDR
- Coinbase surpassed $1 billion in bitcoin-backed loans via Morpho.
- Bitcoin-backed loan cap raised from $1M to $5M in upcoming update.
- Onchain loans allow users to borrow without selling bitcoin assets.
- Coinbase plans future support for more cryptocurrencies as collateral.
Coinbase has reached a new milestone, surpassing $1 billion in bitcoin-backed onchain loans. The service, powered by the decentralized finance (DeFi) protocol Morpho, allows users to borrow USDC by using their bitcoin holdings as collateral. The rapid growth of this service, which launched in January, highlights the growing demand for crypto-backed lending solutions. Coinbase’s ambitious plans are set to expand the program even further.
Rapid Growth in Bitcoin-Backed Lending
Coinbase launched its onchain bitcoin-backed loan service in January 2025, and in just eight months, it has successfully originated over $1 billion in loans. The service allows users to borrow cash against their bitcoin holdings, without the need to sell their assets. This offers borrowers the advantage of avoiding taxable events while retaining exposure to Bitcoin’s price movements.
CEO Brian Armstrong shared his excitement about the achievement, noting, “Next goal: $100B in onchain borrow originations.” Coinbase aims to maintain the momentum by increasing the maximum loan amount. Currently, users can borrow up to $1 million in USDC, but the company plans to raise this cap to $5 million in the near future.
Partnership with Morpho and DeFi Integration
The loan program is powered by the DeFi protocol Morpho, which is part of the Coinbase Ventures portfolio. Through this partnership, Coinbase customers can access onchain loans by using their bitcoin as collateral, which is converted to Coinbase-wrapped bitcoin (cbBTC). The process is seamless, with no conversion fees involved.
The platform operates on Ethereum’s Layer 2 network, Base, allowing for quicker and cheaper transactions. Coinbase’s involvement is largely in providing the interface, while Morpho manages the backend operations of the loans. Users can select their preferred loan-to-value (LTV) ratio, which must meet a minimum of 133%. The protocol liquidates positions if the collateral’s value falls below 86% of the loan value.
Flexibility and Security in Borrowing
Coinbase’s onchain loan system offers several benefits for borrowers. The platform’s flexible repayment terms and dynamic interest rates ensure that customers can adjust to market conditions. Interest rates are updated automatically with each block on the Base network, reflecting changes in the market. However, borrowers must maintain a healthy LTV to avoid liquidation.
The service is designed to appeal to users looking to access liquidity without selling their bitcoin. According to a Coinbase spokesperson, the most common reasons for taking out loans include debt consolidation, covering unexpected expenses like medical bills, and investing in large purchases or real estate. The platform has also experienced increasing demand from users with larger bitcoin holdings, prompting the upcoming increase in borrowing limits.
Future Expansion Plans
The success of Coinbase’s bitcoin-backed loan service has caught the attention of the broader crypto industry. Coinbase’s plans to expand the service come as the asset-backed lending market is expected to reach $1.3 trillion by 2030. With the ongoing growth of the onchain economy, Coinbase is positioning itself to attract high-net-worth individuals and institutional clients who may be looking for larger loan amounts.
In addition to bitcoin, Coinbase has expressed intentions to support other cryptocurrencies as collateral in the future. The platform is currently available to U.S. customers, excluding those in New York. As the service expands, Coinbase aims to enhance its offerings by including more digital assets for lending.
As the DeFi sector continues to grow, Coinbase’s involvement in the bitcoin-backed lending market shows its commitment to bridging the gap between traditional finance and decentralized finance. The company’s vision of integrating crypto more deeply into conventional financial systems is becoming increasingly evident.
