Coinbase has introduced fixed-rate USDC loans collateralized by cbBTC, giving eligible customers a new way to access liquidity while retaining bitcoin exposure. The product runs through Morpho Midnight on the Base network and sets both the interest rate and repayment deadline at the moment a borrower accepts an onchain offer.

The offering expands Coinbase’s existing onchain borrowing service, which has relied on Morpho Blue for variable-rate loans. That earlier product has grown to more than $1.4 billion in outstanding loans secured by roughly $3 billion in collateral. Customers can now select between the two structures depending on their preference for cost certainty or open-ended flexibility.

How the Fixed-Rate Loans Work

Borrowers pledge bitcoin held on Coinbase, which is converted into cbBTC, an ERC-20 token backed one-for-one by bitcoin in Coinbase custody. The cbBTC is then transferred to a Morpho smart contract on Base, and the customer receives USDC. Coinbase manages the user interface while Morpho supplies the lending protocol and Base handles settlement.

Unlike variable-rate loans, each fixed-rate position locks the interest rate and maturity when the transaction is executed. Lenders post offers through an onchain order book, and borrowers choose from available rates and terms. Coinbase currently supports maturities at the end of the current month or the following month, with “end of month” defined as the last Friday of the selected month.

Borrowers must repay the USDC before the maturity date. Failure to do so allows the lender to claim the cbBTC collateral under the loan terms. The fixed structure eliminates the risk that the interest rate will change after the loan is accepted, a feature that distinguishes it from Morpho Blue loans, where rates adjust with supply and demand.

Morpho Midnight’s Role and Scale

Morpho launched Midnight on Base in July to enable fixed-rate, fixed-term lending through an intent-based peer-to-peer system. Capital can remain in variable-rate markets until a fixed-rate offer is matched, at which point the required liquidity moves into the specific loan. The protocol currently holds about $30 million in deposits.

Across all integrations, Morpho Blue supports approximately $5.2 billion in outstanding loans and $16 billion in deposits. Coinbase’s figures represent activity accessed through its platform rather than the full protocol. A Morpho spokesperson noted that Coinbase is the first major consumer platform to offer Midnight loans at scale, with market makers and other platforms also using the protocol.

Morpho co-founder Merlin Egalite described the launch as Coinbase’s first fixed-rate loan product, allowing customers to borrow USDC against bitcoin with a defined maturity. The architecture may later support structured credit and lending against tokenized real-world assets, though additional markets will require separate integrations.

Availability, Risks and Broader Context

The fixed-rate loans are available to eligible U.S. customers, with New York excluded from the initial rollout of Coinbase’s Morpho-powered borrowing service. Collateral risk remains linked to the value of cbBTC. Positions are subject to loan-to-value limits, and liquidation can occur if bitcoin’s price declines enough to push debt past permitted thresholds, even when the interest rate itself stays fixed.

Variable-rate loans through Morpho Blue have no fixed maturity and can remain open as long as collateral requirements are met. Fixed-term borrowers face a hard deadline after which the lender may seize collateral. Data from mid-September showed limited early activity in some other Midnight markets, including those backed by tokenized stocks, where fixed-rate borrowing had not yet gained traction.

Coinbase continues to expand its financial product suite beyond crypto lending. The exchange has begun offering eligible UK customers access to nearly 4,000 U.S. stocks with 24-hour weekday trading, fractional shares and funding in pounds or USDC. In the United States, it has also opened retail IPO access through its broker-dealer, starting with the Oura offering.

Separately, Coinbase has expanded USDC lending opportunities, including a Morpho-powered product in Brazil that attracted nearly $500 million in deposits. The new fixed-rate borrowing option adds another layer of choice for customers seeking onchain credit while keeping their bitcoin holdings intact.