Coinbase just dropped a bombshell by partnering with Morpho, a multichain money market, to offer loans backed by Bitcoin, using USDC.
This means you can now borrow up to $100,000 in USDC by putting your Bitcoin on the line as collateral.
Borrow against your Bitcoin
Coinbase announced this new service on January 16, and told that it will allows users to take out loans directly through the layer-2 blockchain Base.
Here’s how it works: when you pledge your Bitcoin, it gets automatically converted into Coinbase Wrapped Bitcoin, cbBTC at a 1:1 ratio before being sent over to Morpho.
Borrowers can access those funds without a fixed repayment schedule, but there’s a catch.
You’ll need to keep an eye on your loan-to-value ratio. If the value of your collateral dips too low, you risk liquidation.
DeFi services are more and more popular
Morpho is building its reputation in the DeFi space and is now the 12th largest decentralized application by TVL, boasting over $3.2 billion in 2024 alone. This means 444% growth.
This move is part of Coinbase’s broader strategy to integrate DeFi tools into its offerings, and they’re framing this new service as a bridge between traditional finance and the crypto market. Plus, if you borrow USDC, you can convert it to good old U.S. dollars for free.
No tax on borrowed money
And here’s another perk, because using this loan service could be a tax-efficient way to unlock liquidity without selling your Bitcoin and triggering capital gains taxes.
For investors looking to keep their tax bills low while still accessing cash, this could be a dream come true.
This announcement follows Coinbase’s launch of cbBTC in September, which allowed users to move Bitcoin into on-chain environments easily.
Since then, cbBTC has surged past $2.1 billion in supply, equivalent to over 21,495 BTC.
