Circle has launched the Digital Asset-Backed Borrowing (DABB) feature in Circle Mint, allowing eligible institutional clients to use Bitcoin as collateral for USDC loans. For this, BTC is transferred into Circle's infrastructure, after which an equivalent amount of cirBTC tokens is issued. The acquired asset can be directed to a supported third-party lending market through a wallet controlled by the client, and the borrowed USDC is credited directly to their balance in Circle Mint. Upon repayment of the debt, the collateral in cirBTC is released. This mechanism allows for obtaining dollar liquidity without directly selling the original Bitcoin, with specific loan terms determined by the chosen lending platform and collateral parameters.
Each cirBTC is backed by native Bitcoin at a 1:1 ratio, and the corresponding reserves are available for verification on the blockchain. The underlying BTC is held through Circle National Trust, a licensed trust bank acting as a qualified custodian. Circle positions cirBTC as a tokenized collateral asset that can be used in various institutional scenarios. The parameters of such loans are not fixed: the size of the collateral, interest rates, allowable liquidity levels, and liquidation thresholds depend on the specific lending market and may vary. An important feature of DABB is also the over-collateralization of positions. Thus, the volume of attracted liquidity is determined not only by the value of the locked BTC but also by the rules of the platform where the collateral is used.
At the time of launch, DABB supports Morpho lending markets in two networks – Arc and Ethereum. Arc represents Circle's infrastructure for stablecoin operations, while Ethereum provides access to the existing on-chain lending ecosystem. The company intends to gradually expand the list of supported platforms: among potential integrations, Circle mentions Aave. In the future, the use of cirBTC and DABB may extend to other blockchain networks as cross-network infrastructure develops. As a result, Circle combines Bitcoin storage, its tokenization, and use as collateral within a single workflow of Circle Mint, while maintaining interaction with external lending protocols.
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