Borrow Dollars Without Selling Bitcoin…Coinbase Makes a Decisive Move with Fixed-Rate Loans

▲ Source: Coinbase Blog ©CoinReaders

A loan service has been introduced on Coinbase that allows users to borrow dollar-pegged stablecoin USDC by collateralizing Bitcoin (BTC) without selling it, with the interest rate and repayment date fixed from the outset. With the addition of a fixed-rate, fixed-term structure to on-chain lending, which was previously dominated by variable rates, attention is focused on whether the Bitcoin-collateralized credit market will expand.

According to investment media FXStreet on September 23 (local time), Nasdaq-listed virtual asset exchange Coinbase launched a fixed-rate lending service that allows users to borrow USDC using Bitcoin as collateral. The interest rate and repayment date are fixed at the time the loan is executed, designed to allow users to clearly understand the loan cost and period in advance, unlike existing variable-rate loans where interest rates fluctuate based on borrowing demand and supply.

The new service is based on Morpho Midnight, a decentralized, non-custodial fixed-rate lending protocol launched in July this year, with transactions settled on Coinbase's Ethereum (ETH) Layer 2 network, Base. Existing Coinbase loans were offered through Morpho Blue, where interest rates could rise if borrowing demand surged. The existing variable-rate service currently has over $1.4 billion in active loans based on approximately $3 billion in collateral, and the fixed-rate product is offered alongside it, not as a replacement.

Bitcoin-collateralized fixed-rate lending itself is not a new concept. Ledn and SATL Lending, among others, have offered similar products for years. However, Coinbase's service is characterized by its operation on-chain through a decentralized finance (DeFi) application while being accessible within a popular consumer app. Paul Frambot, co-founder and CEO of Morpho, announced plans to expand on-chain credit to the level of the global credit market by broadening new loan types and use cases based on the joint product with Coinbase.

The Bitcoin-collateralized credit market is also being discussed for its rapid growth potential. According to the Bitcoin Digital Credit Report compiled by Apyx and BitcoinTreasuries.net, the current market size is approximately $16 billion. Some forecasts anticipate the market size to grow to $130 billion by 2030, along with the expansion of preferred stock structures.

The demand for collateral utilization among Bitcoin holders has also been confirmed. A survey of 1,244 virtual asset holders in the US and Australia conducted by Protocol Theory in February-March 2026 revealed that 88% of respondents were willing to consider using virtual asset-backed loans or credit products. Coinbase's new service adds a fixed-rate option to the demand for securing liquidity without disposing of Bitcoin, demonstrating product diversification in the on-chain lending market, which was previously dominated by variable rates.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*