Coinbase launches Bitcoin-backed loans through Morpho DeFi partnership
2025-01-16
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Cryptocurrency exchange Coinbase has reintroduced Bitcoin-backed loans in the United States, giving users the ability to borrow against their digital asset holdings. 
The new product line allows US account holders, excluding residents of New York, to borrow up to $100,000 in USD Coin (USDC) using their Bitcoin BTCUSD holdings as collateral. Only BTC held on Coinbase qualifies as collateral for the loan. 
Coinbase has tapped decentralized finance protocol Morpho Labs to facilitate the lending process, which will occur entirely on Base, the exchange’s Ethereum layer-2 network. 
Coinbase executive Max Branzburg told Cointelegraph that the new product demonstrates the exchange’s “commitment to economic freedom,” adding that “crypto-backed loans allow our customers to do more with their Bitcoin, and we’re making it happen onchain.”
A Coinbase communications representative clarified to Cointelegraph that the exchange “provides a simple way to access this loan market and is not directly involved with the loans.”
“Users will be able to tap into competitive interest rates with no Coinbase fees or credit checks and can pay back their loans on their own timeline with flexible repayment terms,” the representative said.
The new product line marks Coinbase’s second foray into the Bitcoin lending market. In May 2023, the exchange announced it would be ending its Borrow program, which allowed users to obtain cash loans backed by their BTC holdings. The program was officially shut down on Nov. 20, 2023. 
Demand for Bitcoin-backed loans heats up
Bitcoin-backed loans allow holders to access capital without having to sell their underlying holdings — a crucial feature for individuals who want to maintain their wealth and avoid large tax bills. 
Borrowing against assets is a practice that wealthy households have utilized for generations. Also known as “borrow, borrow, die,” this strategy allows the wealthy to take out asset-leveraged loans in perpetuity. 
The rising value of Bitcoin has left many early holders with newfound wealth. As a result, the market for Bitcoin-backed loans could surge in the coming years.
According to HFT Market Intelligence, the market value of Bitcoin-backed loans could rise from $8.5 billion in 2024 to $45 billion by 2030.
Growing Bitcoin adoption has also encouraged more financial institutions to enter the crypto lending market. Bitcoin-backed lending protocol Ledn told Cointelegraph that major institutions are moving beyond exchange-traded funds and getting into the crypto lending business. 