Morpho Protocol

Circle has opened a service letting eligible institutions borrow USDC against Bitcoin collateral, but the terms of every loan are set by Morpho, a third-party lending protocol, not by Circle itself. The launch went live on Arc and Ethereum on Sept. 21, and a same-day snapshot showed $14.13 million already borrowed against an 86% liquidation threshold.

• Circle’s Digital Asset-Backed Borrowing went live on Arc and Ethereum on Sept. 21, for eligible institutions only, excluding New York clients.
• A Sept. 21 snapshot of the Arc USDC-cirBTC market showed $14.13 million borrowed against $176.99 million in total market size, an 86% liquidation loan-to-value limit and 7.98% utilization.
• Circle’s reserve dashboard reported 948.75081803 cirBTC outstanding against 951.25857454 BTC in reserves as of Sept. 20, split roughly 397 on Arc and 552 on Ethereum.

• 86% liquidation loan-to-value limit set by the Arc market
• $14.13M borrowed against a $176.99M total Arc market size
• 948.75 cirBTC outstanding versus 951.26 BTC held in reserve

Circle Mint customers can now deposit native Bitcoin, convert it into wrapped cirBTC, and post that token as collateral to borrow USDC in a single workflow, according to its report from CryptoSlate. Borrowed USDC settles directly into the customer’s Circle Mint balance, cutting the number of separate systems a treasury desk needs to touch to raise dollar liquidity without selling its Bitcoin holdings.

Morpho, Not Circle, Sets Every Loan Term

Circle Mint is the account interface and cirBTC is Circle’s tokenized claim on native Bitcoin, but the actual lending market belongs to Morpho, a separate protocol. Morpho’s documentation describes each market as an independent combination of loan asset, collateral, oracle, interest-rate model and liquidation loan-to-value limit, meaning Circle coordinates the customer experience while the selected market controls borrowing costs, collateral limits and available liquidity.

A position can become liquidatable even though the underlying Bitcoin was never sold, because the cirBTC token itself sits inside the lending market.

A streamlined deposit-to-borrow interface does not remove the need to monitor collateral values, utilization rates and market-specific borrowing costs over the life of a loan.

Arc Market Shows $14.13 Million Borrowed on Launch Day

A Sept. 21 snapshot of the Arc market for USDC loans against cirBTC showed $14.13 million borrowed out of $176.99 million in total market size, putting utilization at 7.98%. Available liquidity stood at $162.85 million, more than eleven times the amount actually drawn, and the activity log showed at least one borrow transaction that day.

Those numbers describe a single point in time on one network and do not extend to Ethereum, where the service also runs.

Circle’s reserve dashboard put total cirBTC outstanding at 948.75081803 tokens against 951.25857454 BTC held in reserve as of Sept. 20, a gap of roughly 2.5 BTC. Of that supply, about 397 cirBTC sat on Arc, Circle’s own layer-1 network, versus about 552 on Ethereum, a split that matters because Arc runs on a permissioned validator set rather than Ethereum’s open one.

Demand Beyond Launch Day Remains Untested

Circle’s service shortens the path from held Bitcoin to spendable USDC, but it does not convert variable DeFi credit into a fixed-rate Circle loan. The 86% liquidation threshold, the interest-rate model and the available liquidity all remain Morpho’s to set and adjust, not Circle’s.

The launch-day figures show the Arc market functioning with heavy spare capacity rather than heavy demand, since only 7.98% of available liquidity was drawn. Whether cirBTC volumes grow will depend on borrowing activity in the weeks following the Sept. 21 snapshot.

The CCS read. The wider liquidity pool matters more than the borrow figure. With $162.85 million sitting unused against $14.13 million drawn, Circle has built spare capacity institutions can scale into gradually, testing collateral mechanics with small positions before committing larger Bitcoin balances to a market where liquidation risk sits outside Circle’s control.

Circle has not disclosed a target for cirBTC supply or borrowing volume, leaving the next test as whether utilization on the Arc market climbs meaningfully above 7.98% once institutions move past initial trial positions.