Circle launches USDC collateralized loans for institutional clients

stablecoin Issuer Circle launches the Bitcoin mortgage lending service, where institutional customers can borrow from BTC to USDC

stablecoin Issuer Circle has launched a lending service for institutional clients that pledges Bitcoin as collateral. Eligible Circle Mint customers can borrow their holdings of BTC as mortgage through the on-chain Lending Marketplace to access USDC . This move is seen as signaling further expansion in the institution's crypto-lending ecosystem.

How the service works

The service, dubbed the digital asset Mortgage Lending Hub, allows customers to deposit Bitcoin , forge Circle's wrapper Bitcoin token cirBTC and offer it as collateral on a supported third-party lending marketplace such as Arc or Ethereum . Morpho is the first borrowing protocol that has been supported.

According to Circle, the borrowed USDC will be deposited directly into customers' Circle Mint account balances while interest rates on loans, collateral requirements and clearing thresholds are determined by a third-party lending marketplace. Related loan positions take an over-collateralized model with collaterals provided through wallets controlled by the customer to third parties under the DeFi agreement rather than being loaned out directly by Circle.

CirBTC background with Arc mainnet on line

Circle had previously launched cirBTC at Ethereum in June. The token is backed by a 1:1 ratio to the Bitcoin held by Circle National Trust.

Both of these moves occurred shortly after Circle released Arc mainnet . Arc is the first layer blockchain built by Circle, primarily aimed at payment and financial market scenarios for stablecoin , with USDC as native Gas token , and supporting token cryptographic assets including BUIDL from BlackRock and Circle's own USYC.

Continued expansion of institutional crypto lending

Circle's launch continues the industry-wide trend of allowing institutional investors to access crypto asset mortgage loans while keeping collaterals in existing custody arrangements.

In February of this year, custodian bank Anchorage Digital partnered with Kamino to allow institutions to borrow staking Solana ( SOL ) in its custody at Anchorate Digital Bank without the need for a borrower to move collateral out of qualified custody.

The Bitcoin collateral model emerged in March: Lombard partnered with Bitwise to develop a borrowing system for the custodian holding BTC , and Morpho provided the lending infrastructure. Unlike Circle's mode of converting BTC into cirBTC as collaterals, which would be deposited, Lombard's scheme is designed to keep the underlying Bitcoin permanently in custody without encapsulation or cross-chain bridge attachment.

Also in March, BitGo expanded its institutional lending business with the launch of a financing platform that supports borrowing and lending using custodian liquidity, staking and locked-in state crypto asset . Its portfolio model allows many types of assets to act as collateral together without having to submit mortgages for individual loans separately.

Source by Circle

(Risk Warning: The above is for public information only and does not constitute any investment advice. digital asset Market fluctuations are high, please carefully evaluate the risks involved.)