Borrow Against Your Bitcoin Easily on Coinbase
Bitcoin-backed loans are now rolling out on Coinbase, allowing customers to borrow USDC without having to sell their bitcoin. These loans come with competitive interest rates, flexible repayment terms, and instant access to funds.
The loans are powered by Morpho, an open-source lending protocol on Base, and will initially be available in the U.S. (excluding New York State), with plans to expand to more markets.
Getting a bitcoin-backed loan is now faster and simpler than ever. In just under a minute, you can receive a loan in USDC without selling your BTC. This lets you maintain your bitcoin holdings while gaining access to funds that you can use however you need.
Why Borrow USDC Instead of Selling Bitcoin?
By borrowing against your BTC instead of selling it, you can delay triggering any tax gains or losses. Additionally, holding onto your bitcoin allows you to benefit from potential future price increases while still accessing liquidity when needed.
With this loan, you can:
- Earn over 4% in USDC rewards
- Send USDC globally for free
- Use USDC onchain for various transactions
- Convert USDC to USD at a 1:1 rate for free, making it easy to cover major expenses like buying a car or making a downpayment on a home
Since the loans are powered by Morpho, interest rates are determined by an open market lending pool that updates in real time, ensuring that borrowers always get competitive rates.
Onchain Finance: The Future of Borrowing
Coinbase is revolutionizing personal finance by making it faster, more accessible, and decentralized. Crypto-backed loans give users more financial freedom by utilizing onchain technology, making financial services more transparent and efficient.
In September, Coinbase introduced Coinbase Wrapped Bitcoin (cbBTC), which allows customers to use their bitcoin onchain. Now, with the launch of bitcoin-backed loans, customers can leverage cbBTC without leaving the Coinbase platform.
How Does It Work?
When you borrow USDC against your bitcoin:
- Your pledged BTC is automatically converted into cbBTC (1:1) for free.
- The cbBTC is transferred to Morpho’s smart contract.
- Morpho processes the loan and disburses USDC into your Coinbase account within seconds.
This integration of cbBTC and USDC allows users to tap into onchain finance effortlessly, bridging the gap between traditional and decentralized finance.
How to Get a Bitcoin-Backed Loan on Coinbase
Borrowing USDC against your BTC is a quick and easy process:
- Open the Coinbase app and go to the Cash tab.
- Click on Borrow and enter the amount of USDC you want to borrow.
- You can borrow up to $100,000 USDC, depending on how much BTC you pledge as collateral.
- Once confirmed, your BTC will be converted to cbBTC and transferred to Morpho’s lending protocol.
- The USDC loan will be deposited into your Coinbase account instantly.
This feature will be available on the Coinbase mobile app, with a planned rollout for web browsers in the near future.
Loan Terms & Interest Rates
- No fixed repayment schedule – Pay back your loan whenever you choose.
- Variable interest rates – Interest rates fluctuate based on real-time market conditions and are updated every few seconds through Morpho’s open market lending pool.
- Risk of liquidation – If the value of your collateral drops too much relative to your loan, liquidation may be triggered. You can track your loan status in the Coinbase app.
For more details, visit the Coinbase Help Center.
Important Considerations
- USDC is natively available on multiple blockchains, including Ethereum, Base, Optimism, Solana, Arbitrum, Polygon, Avalanche, Algorand, Stellar, and Noble.
- Sending USDC is free on all supported networks except Ethereum.
- 1:1 USDC to USD conversion may not be available in all regions.
- Transfer limits apply to Coinbase accounts for security purposes.
Final Thoughts
Crypto-backed loans on Coinbase provide a powerful financial tool that allows users to unlock the value of their bitcoin without selling it. By using cbBTC and Morpho, Coinbase is making it easier than ever to access funds while preserving long-term crypto investments.
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