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      Circle Launches Digital Asset-Backed Borrowing for Institutions

      Circle has introduced a new Digital Asset-Backed Borrowing feature on its Circle Mint platform, allowing eligible institutions to borrow USDC against their Bitcoin holdings without the need to sell their BTC. This feature, which went live on September 2, 2026, utilizes a process where Bitcoin is wrapped into cirBTC, a tokenized version of BTC, which then serves as collateral in Morpho lending markets on both Ethereum and Circle's new Arc blockchain.

      The borrowing process involves institutions depositing BTC into Circle Mint, which is then converted to cirBTC backed 1:1 by BTC held in custody at Circle National Trust. The cirBTC acts as collateral for a USDC loan that is credited directly to the institution's Circle Mint account. Upon repayment of the loan, the collateral is released, allowing the institution to reclaim their original BTC holdings. This streamlined process eliminates the need for institutions to navigate multiple custody and DeFi protocols independently.

      On the launch day of Circle's Arc mainnet, which occurred around September 16, 2026, the demand for cirBTC-backed borrowing was significant, with Morpho vaults attracting over $150 million in USDC and EURC deposits. The choice of Morpho as the initial lending partner reflects Circle's strategy to cater to institutional compliance needs through curated risk parameters, distinguishing it from more open lending pools.

      This new borrowing feature offers institutional Bitcoin holders a strategic advantage, enabling them to access liquidity for operational needs or investment opportunities without selling their BTC, thus avoiding potential tax implications and preserving their investment upside. Circle has indicated plans to expand its offerings to include additional protocols, with Aave being a potential future partner.

      © 2026 KLEA News. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

      Source: KLEA News

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