Coinbase is making it easier for customers to access funds without selling their Bitcoin. Over the next few months, Coinbase will roll out Bitcoin-backed loans, allowing users to borrow USDC quickly and at competitive interest rates.
These loans come with flexible repayment terms, meaning you can pay them back at your own pace.
The loans are powered by Morpho, an open-source lending protocol built on Base, and will initially be available to customers in the United States, excluding New York State.
Over time, Coinbase plans to expand these crypto-backed loans to more regions and add support for other cryptocurrencies as collateral.
Why Take a Bitcoin-Backed Loan?
With this new feature, you can borrow USDC in less than a minute while keeping your Bitcoin intact. Instead of selling your Bitcoin and potentially triggering a taxable event, you can borrow against it and still benefit from future price increases.
Here are some key advantages of using a crypto-backed loan on Coinbase:
- Earn Rewards: Get over 4% in USDC rewards.
- Global Transfers: Send USDC anywhere in the world with zero fees.
- Onchain Utility: Use USDC in the crypto ecosystem without restrictions.
- Easy Conversion: Convert USDC to USD 1:1 for free, allowing you to cover large expenses like a car purchase or mortgage down payment.
How Bitcoin-Backed Loans Work
When you borrow USDC on Coinbase, your Bitcoin is automatically converted to cbBTC (Coinbase Wrapped Bitcoin) at a 1:1 ratio for free.
This cbBTC is then transferred to Morpho’s lending protocol, which powers the loan. This setup allows users to enjoy the benefits of crypto-backed loans without leaving the Coinbase platform.
This feature highlights the power of onchain technology, offering transparent and decentralized financial services that are easy to access through Coinbase’s user-friendly interface.
How to Get a Bitcoin-Backed Loan on Coinbase
Getting started is simple:
- Open your Coinbase app and go to the Cash tab.
- Click on Borrow and enter the amount of USDC you want.
- Choose the Bitcoin amount to pledge as collateral.
- Your BTC is converted to cbBTC and transferred onchain to Morpho.
- Receive USDC instantly in your Coinbase account.
You can borrow up to $100,000 USDC, depending on how much Bitcoin you use as collateral. Initially, this service is available through the Coinbase mobile app, with plans to launch it on the web soon.
Loan Terms & Interest Rates
- Variable Interest Rates: Interest rates are automatically adjusted by Morpho based on market conditions and update every few seconds as new blocks are created on Base.
- No Fixed Repayment Schedule: Pay back your loan whenever you want.
- Collateral Liquidation: If your loan (including interest) reaches a certain threshold compared to your collateral, liquidation may be triggered. You can monitor your loan through the Coinbase app.
The Future of Onchain Personal Finance
With crypto-backed loans, Coinbase is helping users take control of their finances in a new way. By leveraging blockchain technology, customers can now access financial services with more speed, transparency, and flexibility than traditional banking.
Since launching Coinbase Wrapped Bitcoin (cbBTC) in September, Coinbase has made it easier for customers to use Bitcoin within the onchain ecosystem. Now, with crypto-backed loans, users can borrow USDC without leaving the platform, further demonstrating the real-world utility of blockchain finance.
Important Notes & Disclaimers
- USDC is available on multiple blockchains, including Ethereum, Base, Optimism, Solana, and more. Transfers are free on all supported networks except Ethereum.
- The 1:1 USDC to USD conversion may not be available in all regions. While Coinbase does not charge commission fees, third-party spread and processing fees may apply.
- This information is for educational purposes only and not financial, legal, or tax advice. Always consult with a professional before making investment decisions.
Coinbase continues to build innovative financial solutions, and crypto-backed loans are just the beginning of a more flexible and decentralized financial system.
Join Gen z and millennials TaskForce official 2025 WhatsApp Channel To Stay Updated On time the ongoing situation https://whatsapp.com/channel/0029VaWT5gSGufImU8R0DO30
