Circle Launches BTC-Backed Borrowing Service for Institutional Clients

FinTech company Circle, the issuer of the USDC stablecoin, announced the launch of Digital Asset-Backed Borrowing (DABB), a lending service for eligible Circle Mint clients. It allows them to mint Circle Wrapped Bitcoin (cirBTC) and use it as collateral to borrow USDC through third-party lending protocols.

DABB combines the core collateral and borrowing operations into a single workflow within Circle Mint. Clients need to complete several steps:

1. Deposit BTC and mint cirBTC.
2. Select a supported third-party lending market.
3. Supply cirBTC as collateral and borrow USDC.
4. Receive the borrowed USDC directly in their Circle Mint balance.
5. Repay the USDC debt to release the cirBTC collateral.

At launch, DABB supports Morpho lending markets. Circle plans to add other protocols, including Aave. The service initially operates on the Arc and Ethereum blockchain networks, while Circle is also considering support for DABB and cirBTC on other blockchain networks in the future.

DABB positions are open-ended and overcollateralized. The amount of USDC that clients can borrow is determined by the value of the collateral and the parameters of the selected market instead of a traditional unsecured credit underwriting process. Clients can add collateral and repay their debt at a time of their choosing.

Digital Asset-Backed Borrowing is available only to eligible institutional Circle Mint clients. The product isn’t available to individuals. Clients in New York state are also excluded from the pool of potential users.

The mainnet of the public Arc blockchain network launched with support from more than 100 financial market participants. Shortly after the launch, Circle announced that cirBTC had been added to the network.