Coinbase has rolled out crypto‑backed USDC loans to eligible users in the UK, extending a product it first tested in the US and other markets. The service lets customers borrow USDC against their crypto holdings, rather than selling their crypto for cash.
Users can now lock up assets, such as Bitcoin, on Coinbase and receive USDC directly in their Coinbase account. This setup gives them quick access to liquidity while they keep price exposure to their crypto collateral.
Coinbase says crypto-backed loans are processed on Base, its Ethereum layer-2 network, using the Morpho DeFi lending protocol under the hood. The main Coinbase app provides a simple interface, but the loans themselves are fully on‑chain.
How the Coinbase Crypto‑Backed USDC Loans Work
To open a loan, a UK user selects an eligible asset, chooses the amount of USDC they want to borrow, and pledges crypto as collateral. The collateral moves into a Morpho smart contract on Base, while USDC appears in the user’s Coinbase balance.
Loans are over‑collateralized, with a typical initial loan‑to‑value (LTV) of up to about 75%. If the outstanding loan and interest approach around 86% of the collateral’s value, the protocol automatically liquidates part of the crypto to repay the debt and a penalty.
There are no fixed repayment dates. Instead, interest accrues over time, and borrowers can repay at any time, as long as their LTV remains below the liquidation threshold.
Why Coinbase is Expanding USDC Lending
Coinbase has been continuously building a lending and borrowing stack centered on USDC, Bitcoin, and Ethereum. It first introduced bitcoin‑backed USDC loans, then rolled out on‑chain USDC lending, followed by ETH‑ and staked‑ETH‑backed loans via Morpho on Base.
The company now offers crypto‑backed loans to more regions, including the UK, where users can borrow USDC without leaving Coinbase’s regulated environment. The firm positions these products as a way to give customers liquidity while they keep long‑term crypto positions.
USDC remains central to this approach. It is the stablecoin Coinbase supports most closely, so using USDC for both loans and on‑chain lending helps deepen demand for dollar‑pegged liquidity on Base.
For UK borrowers, the main benefit is straightforward: they can get USDC quickly without selling bitcoin or other supported assets. They can then swap USDC for pounds or use it across DeFi and exchanges that accept the stablecoin.
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