Circle has launched Digital Asset-Backed Borrowing for eligible Circle Mint customers, creating a new institutional use for Bitcoin and USDC. The service enables customers to deposit bitcoin-backed collateral and use USDC without selling their BTC holdings.
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Circle Mint Adds Bitcoin-Backed USDC Borrowing
Under the new service, customers deposit BTC and mint Circle Wrapped Bitcoin, known as cirBTC. They can then supply cirBTC to supported third-party lending markets and borrow USDC into their Circle Mint accounts.
The product is available for both Arc and Ethereum, Circle said, with Morpho being the first supported lending protocol. Circle plans to expand access to more lending markets and networks, with Aave support on its way soon. Customers control their positions via their own wallet that is linked to the Circle Mint workflow.
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The borrowing positions are overcollateralized, meaning that access is based on the value of the collateral and market rules rather than unsecured credit checks. Rates, liquidation levels, liquidity, and collateral requirements are determined by the lending market chosen and may vary from time to time.
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cirBTC Connects Bitcoin Collateral With USDC Liquidity
According to Circle, each cirBTC token is backed 1 to 1 with native BTC, and reserves can be verified on-chain. The underlying BTC is held through Circle National Trust, which Circle describes as a federally chartered trust bank.
The structure allows institutions to keep their exposure to Bitcoin and lend using the asset as a program. Borrowed USDC can return to the Circle Mint directly, which reduces the number of platforms involved in the process.
Arc provides Circle-designed infrastructure for stablecoin finance, while Ethereum offers established lending markets and broader onchain activity. Both networks are available to customers depending on the borrowing costs, liquidity requirements, and internal risk management, Circle said. The service may be expanded with additional networks as the company progresses.
TD Cowen Keeps Buy Rating as CRCL Rises
After the announcement, Circle stock (CRCL) soared by 2% to $93.69, boosted by Bitcoins recovery above $85k. Another catalyst for the recovery has been the SEC-approved temporary relief for limited tokenized U.S. stock trading on approved on-chain venues.
Amid these developments, TD Cowen analyst Bryan Bergin has kept his rating on Circle as Buy while increasing the price target to $92 from $87. The firm pointed to improved reserve economics due to the Federal Reserve rate hike and possible non-reserve expansion from Arc.
The revised target followed the Senates failure to advance the CLARITY Act earlier this month. However, TD Cowen has said its investment thesis remained unchanged despite the failed vote, according to reports on the analyst note.