Circle has introduced digital asset-backed borrowing in Circle Mint, its platform for institutional clients. Qualified customers can take out USDC loans secured by bitcoin without selling it, with the borrowed funds arriving directly in their Circle Mint balances.

Clients deposit bitcoin, which is used to mint a wrapped token that is then supplied as collateral. Custody sits with Circle's federally regulated national trust, while the lending itself runs through onchain protocols. Morpho is the first integrated protocol, and Circle said Aave is expected to be added later.

The service operates on Ethereum and on Arc, the layer-1 network Circle brought to mainnet in mid-September. It combines a regulated custodian and institutional onboarding with permissionless lending markets, keeping the customer relationship with Circle while the loan terms are set by the protocols.

Borrowing against bitcoin rather than selling it is an established practice among large holders, often for tax or long-term allocation reasons. Circle's version tests whether institutions will use public lending markets if a familiar custodian handles the collateral. Interest rates, loan-to-value limits, and liquidation handling will determine demand.