Coinbase has expanded its crypto credit suite with fixed-rate USDC loans backed by Bitcoin, executed fully onchain through Morpho Midnight on Base. The exchange’s second foray into Bitcoin lending blends the simplicity of a mainstream app with the transparency of a DeFi (decentralized finance) protocol.
🔑 Key Takeaways
- Coinbase has launched fixed-rate USDC loans backed by Bitcoin via Morpho Midnight, deployed on Base.
- The interest rate and repayment date are locked at origination, giving borrowers full visibility on cost and tenor.
- The Bitcoin-backed credit market is worth roughly $16 billion today and could reach $130 billion by 2030.
- Morpho Blue tracks $5.2 billion in outstanding loans and $16 billion in deposits across all integrations.
- This marks Coinbase’s second push into Bitcoin lending after winding down its original Borrow program in 2023.
A fixed-rate product built on Morpho Midnight
The new offering runs entirely onchain (on the blockchain) through Morpho Midnight, a non-custodial decentralized lending protocol launched in July 2026 on Base, Coinbase’s Ethereum layer-2 network. Users lock BTC as collateral, receive USDC (a dollar-pegged stablecoin) and repay at a rate fixed at origination rather than a floating rate that moves with market conditions.
This architecture is distinct from the existing variable-rate product, which already uses Morpho Blue and represents over $1.4 billion in outstanding loans against nearly $3 billion in collateral. Morpho Midnight held roughly $30 million in deposits at launch and is now the first vehicle for retail-scale structured Bitcoin credit. Coinbase is the first major mainstream platform to deploy Midnight loans at scale.
Mechanics, maturities and pricing
The mechanics are straightforward: the borrower posts BTC as collateral, receives USDC, and must repay principal plus interest before a defined maturity date. At maturity, if the borrower has not settled the loan, the lender can claim the collateral. Unlike the 2023 program, no strict amortization schedule is imposed under the current terms.
| Feature | Detail |
|---|---|
| Accepted collateral | Bitcoin (BTC) |
| Borrowed asset | USDC (stablecoin) |
| Interest rate | Fixed, set at origination |
| Available maturities | End of current month or following month (last Friday) |
| Underlying protocol | Morpho Midnight (non-custodial) |
| Network | Base (Ethereum L2) |
| Rate discovery | Onchain orderbook |
Rates are set by supply and demand on an onchain orderbook. Coinbase has not publicized proposed rates, loan-to-value (LTV) ratios, eligibility criteria or the geographic regions covered. The platform clarifies that « end of month » means the last Friday of the month.
A fast-growing Bitcoin credit market
The Bitcoin-backed credit market is currently valued at roughly $16 billion, according to the Bitcoin Digital Credit Report compiled by Apyx and BitcoinTreasuries.net. Some forecasts see it expanding to $130 billion by 2030 as preferred-equity structures and structured products mature.
« Coinbase Borrow gives our customers access to liquidity without having to sell their assets, and fixed-rate borrowing offers them even more choice in managing that credit. »
Jacob Frantz, Head of Yield and Investments Product at Coinbase
Demand-side signals are encouraging. In early 2026, Protocol Theory surveyed 1,244 crypto holders in the United States and Australia (February–March 2026) and found that 88% of respondents would consider taking out a loan or credit product backed by their crypto holdings.
A second attempt after the 2023 retreat
This is Coinbase’s second attempt at the Bitcoin lending market. In November 2023, the platform wound down its original « Borrow » program, which had allowed users to borrow cash against their bitcoin. The new offering differs in being fully onchain and built on a DeFi protocol, while still distributed via a mainstream retail app.
Paul Frambot, co-founder and CEO of Morpho, noted on X that the products the two teams have built together have been « immensely successful » and that the goal now is to expand the range: « We are now building on that base and beginning to scale: new loan types and use cases, bringing onchain credit closer to the scale and diversity of global credit markets. »
Fixed-rate Bitcoin loans are not entirely new — lenders such as Ledn and SATL Lending have offered them for years. What sets Coinbase apart is the combination of non-custodial DeFi infrastructure and mainstream distribution through the Coinbase app, a bridge that has never been deployed at this scale.
Conclusion: towards mainstream onchain Bitcoin credit?
With Morpho Midnight, Coinbase is testing a simple hypothesis: a Bitcoin holder wants liquidity without selling, but also without the volatility of a variable rate. If fixed rates remain attractive and the repayment mechanics stay simple, the offering could accelerate the migration of crypto lending from specialized lenders to mainstream platforms.
One open question remains: the lack of public detail around LTV ratios, eligibility criteria and geographic availability. As global pressure tightens — particularly under MiCA in Europe — disclosure of these parameters will be key to adoption. The bullish scenario sees Bitcoin credit reaching $130 billion by 2030; the cautious scenario reminds investors that collateral liquidation in the event of default remains a real risk, as with any secured loan.
Sources
- CoinDesk — Coinbase users can now borrow USDC against bitcoin at a fixed rate
- Coinbase Blog
- Coinbase Help — Loan setup
- Altcoin Buzz — Coinbase adds fixed-rate Bitcoin loans via Morpho Midnight
- Yahoo Finance — Coinbase rolls fixed-rate Bitcoin loans
- Duane Morris — Coinbase enters crypto lending market for second time
This article is published for informational and educational purposes only. It does not constitute investment advice. Do your own research (DYOR) before making any decision.
