Circle adds Bitcoin-backed USDC borrowing for institutional Circle Mint customers

# What happened Circle launched Digital Asset-Backed Borrowing in Circle Mint for eligible institutional customers. The flow combines steps to turn native Bitcoin into onchain collateral and borrow USDC without selling BTC. The service runs on Arc and Ethereum and connects customers to third-party lending protocols.

# How the workflow works

1. 1An eligible institution deposits BTC with Circle and mints cirBTC.
2. 2The customer transfers cirBTC into a user-controlled Smart Wallet.
3. 3The customer posts cirBTC as collateral on a supported lending protocol and borrows USDC.

Circle supplies the interface and Smart Wallet technology. The lending, collateral management and liquidation mechanics are executed by third-party DeFi protocols and their smart contracts. When assets move into the Smart Wallet, they leave Circle Mint's regulated custody environment.

# Protocols and market details Morpho is the first protocol integrated with the workflow and currently supports a cirBTC collateral market against USDC on Arc. Reported live metrics at the time of publication showed $18.86 million outstanding borrowing, $157.85 million available liquidity, a $176.71 million total market size and 10.67% utilization. The market uses an 86% liquidation loan-to-value threshold. Circle said Aave and other protocols are expected to be added later.

# cirBTC backing and verification Circle published backing data for cirBTC showing reserves exceed the outstanding token supply. cirBTC connects native Bitcoin to Ethereum and Arc smart contract environments. Circle introduced cirBTC on Ethereum in June and brought it to Arc on Sept. 21.

# Risk, controls and eligibility Borrowing terms, interest rates, collateral limits and liquidation parameters are set and enforced by the chosen lending market, not by Circle. Automatic liquidation can occur if collateral values, oracle feeds, interest accruals or protocol settings push a position past the protocol's limits.

# Why it matters for institutional customers The workflow gives institutions a way to access dollar liquidity tied to USDC while retaining exposure to their Bitcoin holdings rather than selling them. Borrowed USDC lands directly in the Mint balance used by institutional clients, enabling immediate use inside Circle's institutional platform. However, custody and credit risk shift once assets enter the Smart Wallet and are governed by external DeFi protocols.

# Practical considerations for institutions

• Review the lending market parameters (LTV, liquidation threshold, interest rates, oracle sources) for the protocol you choose.
• Understand that assets in the Smart Wallet are not under Circle Mint custody.
• Monitor market utilization and liquidity available in the chosen market, which can change quickly.

# Bottom line Circle's new workflow bundles BTC deposit, cirBTC minting and onchain collateral borrowing into a single interface for eligible institutional users. It routes credit and collateral mechanics to third-party lending protocols such as Morpho on Arc, where borrowers and lenders set and face the market terms and liquidation risk.