Circle, the issuer of the USDC stablecoin, has launched a new lending service for institutional clients. The Digital Asset-Backed Borrowing (DABB) service allows eligible Circle Mint customers to borrow USDC against bitcoin holdings.
Under the service, customers deposit bitcoin and receive cirBTC, Circle's wrapped bitcoin token, which the company says is backed one-to-one by the underlying bitcoin. Customers then use cirBTC as collateral in third-party lending markets to borrow USDC, which is credited to their Circle Mint account.
The loans are overcollateralized, meaning borrowers must post more value in collateral than they borrow. Borrowing rates, collateral requirements, and liquidation thresholds are determined by the lending market selected and can change over time. Customers can add collateral or repay loans on their own schedule.
At launch, Morpho is the only supported lending protocol, though Circle said it expects to add others, including Aave, in the future. The service is available on Ethereum and Arc, Circle's own blockchain, which launched its mainnet last week.
Circle stated that the underlying bitcoin is held by Circle National Trust, a federally chartered trust bank and qualified custodian, with reserves verifiable onchain. The company positioned cirBTC as institutional-grade collateral, noting that Circle does not operate a competing exchange or lending protocol.
Clients based in New York are ineligible for the service per the announcement.
