Although it has been active for less than a year, Coinbase’s bitcoin-backed lending program has already surpassed $1 billion in originations, a milestone that underscores rapid institutional and retail appetite for on-chain credit solutions; by routing customer collateral through a regulated Coinbase interface into the Morpho protocol on Ethereum’s Layer 2 Base, the firm has married custodial controls and compliance oversight with decentralized execution, enabling borrowers to receive USDC liquidity without selling BTC. Launched in January 2025, the program reached the milestone in roughly eight months, a pace CEO Brian Armstrong characterized as “hockey stick” growth, and the trajectory signals a maturation of accessible, regulated decentralized finance services that integrate crypto assets with traditional lending needs. The program has processed loans with an average loan size of about $54,000, reflecting broad retail participation. The milestone also reinforces Bitcoin’s role as a foundational reserve asset across decentralized finance, driving demand for collateralized lending with increasing confidence. This growth parallels emerging trends in crypto lending ecosystems that leverage innovative technologies like Kaspa’s BlockDAG scalability.
In under a year Coinbase’s BTC-backed lending hit $1B, blending regulated custody with DeFi execution for USDC liquidity.
The program’s mechanics emphasize a hybrid model: Coinbase handles custody, identity verification, and user experience, while Morpho executes lending operations on-chain, creating what executives describe as “TradFi in the front, DeFi in the back.” Bitcoin collateral is converted one-to-one into Coinbase-wrapped bitcoin (cbBTC) and transferred to Morpho at no fee, and borrowers receive USDC directly into their Coinbase accounts. Loans are over-collateralized, subject to a minimum 133% collateral ratio, with liquidation triggers set when loan balances reach 86% of the collateral’s market value; penalty fees apply during liquidation to ensure debt coverage.
Average loan size is approximately $54,000, and strong demand prompted an increase in individual loan caps from $1 million to $5 million, reflecting intent to serve wealthier clients and larger institutional counterparties. Use cases reported include real estate purchases, debt consolidation, and liquidity to cover high-cost obligations without crystallizing capital gains through Bitcoin sales, a feature that enhances tax efficiency for long-term holders.
The program’s rapid adoption follows the 2023 wind-down of Coinbase’s prior retail loan offering and leverages a broader market context in which hodler balances increased and institutional interest in on-chain credit expanded. While the milestone validates Coinbase’s hybrid approach and may accelerate institutional engagement with crypto lending, risks remain — market volatility, regulatory shifts, and protocol-level vulnerabilities could affect future growth. The firm’s ambitions are substantial, and the $1 billion mark represents both proof of concept and a platform for scaling.
