On September 21 local time, Circle announced a new feature in Circle Mint, its platform for institutional customers, that allows users to borrow USDC from external lending markets against Bitcoin collateral. Eligible institutional customers can deposit Bitcoin, receive cirBTC tokens backed one-to-one by the deposited Bitcoin, and use those tokens as collateral.
Customers supply cirBTC to an external lending market through a wallet they control and borrow USDC on an overcollateralized basis, providing collateral worth more than the loan. The borrowed USDC is credited to the customer's Circle Mint balance, and repayment allows the cirBTC collateral to be released. Users can borrow USDC through Morpho lending markets operating on the Arc and Ethereum blockchains. Circle said it plans to connect other lending services, including Aave. Interest rates, collateral requirements, liquidation thresholds, and available liquidity are set by the lending market selected by the customer and may change. The feature is designed for institutional customers and is not available to customers in New York.
The Bitcoin backing cirBTC is held by Circle National Trust, a federally chartered trust bank. Circle said the Bitcoin is held for the benefit of cirBTC holders, segregated from company assets, and that reserve information is published onchain through Chainlink's proof-of-reserve function. In Arc's official announcement, Circle said lending services are provided by independent third parties and that Circle does not itself originate or underwrite loans or supply the loan funds.