Circle Launches Bitcoin-Backed USDC Borrowing on Arc and Ethereum

TLDR

Circle launched Digital Asset-Backed Borrowing, letting eligible Circle Mint institutions turn Bitcoin into USDC loans.
Morpho is the first lending protocol supported, with Aave expected to join later.
The service runs on both Arc and Ethereum, but New York customers are excluded.
cirBTC reserves currently exceed the token’s circulating supply, according to Circle’s public data.
The Arc lending market for cirBTC carries an 86% liquidation loan-to-value threshold.

Circle has launched a new borrowing service for institutional clients who hold Bitcoin. The service lets eligible Circle Mint customers turn their Bitcoin into onchain collateral and borrow USDC without selling the coin.
Circle announced the launch on Sept. 21. It runs on two networks, Arc and Ethereum, and works through Circle’s Mint account system.
The customer keeps exposure to the Bitcoin backing the position. This means they do not have to give up their holdings to get dollar liquidity.

Digital Asset-Backed Borrowing is now available in Circle Mint for eligible Circle Mint LLC customers.
Deposit BTC. Mint cirBTC. Borrow USDC.
Through one coordinated workflow, customers can use BTC-backed cirBTC as collateral through supported third-party lending markets on Arc…
— Circle (@circle) September 21, 2026

How the Borrowing Process Works
To use the service, an institution deposits Bitcoin and mints cirBTC, Circle’s wrapped version of the coin. The cirBTC token moves into a customer-controlled Smart Wallet.
From there, the customer posts cirBTC as collateral with a supported lending protocol and borrows USDC. The borrowed USDC then moves automatically into the customer’s Circle Mint balance.
Repayment works the same way in reverse. A customer sends USDC from Mint into the Smart Wallet to repay some or all of the debt, and collateral becomes available again.
Circle does not act as the lender itself. Its legal terms state that lending, collateral management and liquidations happen through third-party protocols and their smart contracts, not through Circle directly.
The service is limited to institutions. Retail users cannot open standard Mint accounts, and Circle has excluded New York customers from this product.
Morpho Market Data and cirBTC Reserves
Morpho is the first lending protocol supported under the new service. Circle says Aave is expected to join later, though no date has been set.
On Arc, the Morpho market for USDC loans against cirBTC carries an 86% liquidation loan-to-value threshold. That means a position can be liquidated automatically if collateral value falls too far relative to the loan.
Data checked on Sept. 22 showed $18.86 million borrowed against $157.85 million in available liquidity on that market. Utilization stood at 10.67%.
A day earlier, on Sept. 21, the same market showed $14.13 million borrowed and $162.85 million available, with utilization at 7.98%. The figures show borrowing activity grew in the first day after launch.
Circle’s reserve dashboard showed 948.75 cirBTC outstanding against 951.25 Bitcoin held in reserve. That reserve was valued at roughly $77.19 million.
The underlying Bitcoin is held through Circle’s Bermuda affiliate and kept in custody by Circle National Trust. That trust received a federal charter from the Office of the Comptroller of the Currency in July.
Circle first introduced cirBTC on Ethereum in June. It expanded the token to Arc on Sept. 21, five days after Arc’s public mainnet launch on Sept. 16.
Circle’s institutional USDC services have grown through other partners this year. BNY began offering USDC minting, redemption and custody for institutional clients in June, and Standard Chartered added bank-led USDC access in July.
As of the latest market data, Bitcoin traded at $85,892.30, up 2.25% over the past 24 hours. Ethereum traded at $2,737.96, up 1.47% over the same period.
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