Coinbase rebooted its loan game with Bitcoin Backed Loans, now letting US users outside New York borrow up to a cool $1,000,000 in USDC. Forget selling your Bitcoin; pledge it through the app, get cbBTC, and bam, instant USDC via Morpho on Base. No credit checks, no strict deadlines, just low interest starting around 5%. Watch that over-collateralized LTV, though—86% and your BTC gets liquidated. Over $130 million loaned already. Dig in further to get the full scoop.
Coinbase rolled out their Bitcoin Backed Loans program in January 2025, a fancy way to let users get their hands on USDC stablecoin without selling their precious Bitcoin. Powered by Morpho, some onchain lending thingy built on Base, Coinbase’s own L2 network. This whole setup, basically, lets people grab cash without triggering some annoying taxable event.
It’s back, by the way. The old version, Coinbase Borrow, died in 2023. This new iteration wants to jam DeFi stuff into a simple package.
How does this even work? You pledge BTC via their app, under the “Cash” tab. That pledged BTC turns into cbBTC, a wrapped version, 1:1, no fee. That cbBTC then zooms over to a Morpho smart contract onchain. Collateral! Then Morpho instantly spits out USDC into your Coinbase account. Boom. You need a smart wallet for this onchain dance.
Limits? They started small, a $100,000 borrow limit. Then, bam, April 30, 2025, it jumped to $1,000,000 USDC. How much you can borrow just depends on your Bitcoin stash. Interest rates aren’t some fixed number; they bounce around based on Morpho’s market. Can be as low as 5%. Repayment? Whenever you want. No deadlines. No Coinbase fees, just the Morpho interest. Automatic variable interest rates are set by Morpho based on Base block creation times.
Collateral is a big deal here. These Bitcoin-Backed loans are over-collateralized. Initially, you needed over 133% BTC value compared to the loan. If your loan-to-value hits 86%, lights out. Liquidation city. Your collateral gets sold off. Covers the loan, interest, a penalty fee. Any leftover BTC goes back to you. Watch that LTV, people. Seriously.
Who can play? Verified Coinbase customers in the US. Not New York State, though. Bitcoin was the only collateral at the outset. They plan to add more stuff and roll this out globally. And no credit checks. Unlike the old version.
What do you do with the USDC? Whatever. Hold it, maybe earn some rewards (>4%). Convert it to USD for free on Coinbase (if available). Send it globally for free on certain networks. It’s a stablecoin, 1:1 redeemable for USD. Works in like 190 countries. Customers in the U.S. can access loans excluding New York State. All Coinbase USD order books take USDC.
Performance? Launched January 16, 2025. By April 30, over $130 million in loans originated onchain. More than 4,211 wallets took loans. Backed by around $227 million in collateral. They bumped the limit due to demand. Strong demand, apparently.
Frequently Asked Questions
How Does the Loan Process Work?
How does borrowing money against digital assets work?
You need verified status. Got enough Bitcoin on the platform? Good.
Apply through the mobile app. Enter desired amount, up to a cool million. Instant disbursement of USD Coin. Like magic, funded instantly.
Your Bitcoin gets converted, locked up. Over-collateralization is a must, gotta be safe.
Loan in USDC, interest fluctuates. Repay whenever, no schedule.
Watch the loan-to-value; too high, it’s liquidation time. That’s just how it is.
What Are the Eligibility Requirements?
Eligibility? You gotta be in the US, but forget New York. Nope.
Gotta have a verified Coinbase account. Duh.
And, get this, you actually need some Bitcoin in there. Like, on Coinbase.
It’s rolling out, so maybe you can’t even get it yet. Who knows?
What Is the Interest Rate?
Interest rates, man. What are they? Not fixed!
These loans powered by Morpho, they’re variable. Morpho calculates them, second by second probably. Rates fluctuate constantly, based purely on market conditions.
Sure, they *say* “as low as 5%,” but don’t expect that to stay. You pay whatever Morpho says.
No Coinbase fees though.
How Is the Loan Repaid?
Repaying these loans is, well, whenever. No schedules, buddy. Pay it all, pay some. You decide; totally your call.
It’s done through the mobile app, easy peasy. Interest adds up constantly, variable rate too. Watch that LTV, a whopping 86% triggers liquidation.
Yeah, they sell your stuff. Harsh. There’s a penalty too, because of course there is. Any leftover Bitcoin comes back.
Are There Any Risks Involved?
Risks exist in lending. Oh yeah, definitely.
Bitcoin backed loans? Adds complexity. Price volatility is a big deal. Like, huge. Collateral value drops? That messes with the LTV. Margin calls? Expect ’em. Ignore ’em? Liquidation. They’ll sell your Bitcoin.
Platform security? Can fail. Hacks happen. Seen it before.
Regulatory stuff is a cloud. Taxes? Who knows. You lose access to your Bitcoin, too. Interest isn’t free, naturally.