Coinbase users can now borrow USDC against bitcoin at a fixed rate
Coinbase now allows users to borrow the USDC stablecoin against their bitcoin at a fixed interest rate and repayment date.
Nasdaq-listed exchange Coinbase COIN$200.40·Market Closed now allows its users to borrow dollar-pegged stablecoin USDC agains their bitcoin BTC$86,037.36 holdings with no surprises on what they’ll pay in interest.
The exchange has rolled out fixed-rate, bitcoin-backed USDC loans, with the interest rate and repayment date set at the time of borrowing, an alternative to the floating-rate loans Coinbase already offers.
“The move takes onchain borrowing beyond the predominantly variable-rate model, giving users greater certainty over the cost and duration of their borrowing,” according to an announcement on Tuesday.
The fixed-rate offering runs on Morpho Midnight, a decentralized, non-custodial lending protocol for fixed-rate and fixed-term crypto loans launched in July this year. It settles transactions on Coinbase’s Ethereum layer 2 network Base.
It marks a meaningful shift from how Coinbase’s lending has worked until now. It’s existing loans run on the Morpho Blue protocol, where rates change, determined by demand and supply conditions and can climb when borrowing demand spikes. The new fixed-rate option sits alongside this floating one, which has more than $1.4 billion in active loans backed by nearly $3 billion of collateral.
Fixed-rate bitcoin-backed loans aren’t new, with lenders like Ledn and SATL Lending offering them for years. What Coinbase has done stands out because it runs onchain, through a DeFi app and inside a mainstream consumer app.
Morpho’s co-founder and CEO Paul Frambot said that Morpho and Coinbase’s joint products have been immensely successful and now they are focusing on scaling those.
“We’re now building on that foundation and starting to scale: new loan types and use cases, bringing onchain credit one step closer to the scale and diversity of global credit markets,” he said on X.
The bitcoin-backed credit market is currently sized at roughly $16 billion, according to the Bitcoin Digital Credit Report compiled by Apyx and BitcoinTreasuries.net. Per some estimates, it is expected to grow to $130 billion by 2030 as preferred equity structures scale.
There is interest among holders to put their BTC to use. Early this year, Protocol Theory surveyed 1,244 cryptocurrency holders across the U.S. and Australia between February and March 2026 and found that 88% of respondents said they would consider taking out a crypto-backed loan or credit product.
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Coinbase's introduction of fixed-rate USDC loans collateralized by bitcoin represents a maturation of on-exchange lending products, traditionally a weakness versus dedicated lending protocols like Aave or Compound. Fixed-rate instruments reduce refinancing risk for borrowers—a persistent pain point in crypto lending where rates float with utilization—and signal institutional appetite for predictable financing costs. This mirrors traditional repo markets where rate certainty is table stakes.
The move addresses a fundamental arbitrage: bitcoin holders seeking yield or leverage without liquidation risk from volatile interest rates. However, it also indicates Coinbase is competing directly with non-custodial DeFi alternatives by offering centralized convenience. The competitive pressure on lending protocol token economics bears watching, particularly if traditional exchanges commoditize fixed-rate lending and capture borrower flow that would otherwise route to decentralized platforms.
USDC adoption as the borrowing asset is notable—it anchors lending activity to Circle's stablecoin rather than ETH or other collateral types, reinforcing USDC's position as the institutional stablecoin of choice post-SVB instability. Success here could shift how on-chain liquidity markets view stablecoin composition.