Circle launches Bitcoin-backed USDC borrowing, leaving liquidation risk with Morpho protocol

Eligible Circle Mint institutions can now deposit Bitcoin, transform it into wrapped cirBTC collateral, and borrow USDC via a Morpho lending market in a single coordinated workflow.

The service launched on Arc and Ethereum on September 21, reducing the number of systems a treasury team must navigate to raise dollar liquidity without selling its Bitcoin.

Access is restricted to eligible participants; New York‑based clients are excluded. The offering is subject to applicable jurisdictions and eligibility criteria. Circle Mint acts as the account interface, cirBTC represents Circle’s tokenized claim backed by native Bitcoin, and Morpho supplies the underlying lending market.

Under the Digital Asset‑Backed Borrowing platform, customers deposit native BTC, mint cirBTC, and supply the token as collateral from a customer‑controlled wallet. Borrowed USDC settles directly into the client’s Circle Mint balance.

While Circle manages the orchestration, the selected Morpho market determines borrowing rates, collateral limits, liquidation thresholds, available liquidity, and general availability. Each Morpho market is characterized as a distinct mix of loan assets, collateral, oracles, interest‑rate models, and liquidation loan‑to‑value caps.

For a treasury operation, the simplified interface does not eliminate the need to monitor collateral value, utilization, and borrowing costs. A position may become liquidated even though the underlying Bitcoin was never sold, because cirBTC remains positioned in the lending market.

Circle's reserve dashboard reported 948.75081803 cirBTC outstanding against 951.25857454 BTC in reserves as of September 20. Approximately 397 cirBTC was allocated to the Arc network, while roughly 552 remained on Ethereum.
Arc, Circle's permissioned layer‑1, operates under a comparable governance model to support institutional choice among supported networks.
The launch shortens the path from held Bitcoin to USDC, though it does not substitute variable‑deposit credit for a fixed Circle loan. Ongoing borrowing activity and favorable market terms will determine whether cirBTC demand sustains itself beyond the initial snapshot.

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