Coinbase Launches Fixed-Rate USDC Loans Backed by Bitcoin

Leading United States cryptocurrency exchange Coinbase has officially opened a stablecoin USDC lending service backed by Bitcoin (BTC) using a fixed interest rate scheme. The initiative answers investor demand for cost and loan-term certainty amid volatility in digital asset markets.

Unlike its previous lending products that apply floating rates, the new facility sets the interest rate and maturity date from the start of the transaction. According to the company's official announcement, the approach "brings on-chain lending beyond the dominant variable model, giving users greater certainty over the cost and duration of their loans."

Technically, the service runs on Morpho Midnight, a non-custodial decentralized lending protocol that specifically handles crypto loans with fixed rates and tenors. Transactions settle through Base, Coinbase's Ethereum layer 2 network. The move marks a significant shift from Coinbase's existing lending model using Morpho Blue, where interest rates fluctuate with supply and demand dynamics. Currently, Coinbase's floating loan portfolio records more than US$1.4 billion in active loans with nearly US$3 billion in collateral.

Although fixed-rate loans backed by Bitcoin are not new—institutions such as Ledn and SATL Lending have offered them for years—Coinbase's move stands out because it integrates a DeFi protocol into a mainstream consumer app. This bridges the gap between decentralized finance and retail users who may not be familiar with non-custodial wallets.

"We are now building that foundation and starting to scale: new loan types and use cases, bringing on-chain credit one step closer to the scale and diversity of the global credit market," said Paul Frambot, co-founder and CEO of Morpho, via platform X.

For Indonesia, this development opens both opportunities and challenges. The domestic crypto market continues to grow with a large retail investor base, but regulations on crypto-asset-based lending are still under development. The Financial Services Authority (OJK) and Bank Indonesia are drafting a supervisory framework for digital assets, including potential lending services. The presence of products like this could spur discussion on consumer protection, risk management, and the integration of traditional finance with DeFi.

Globally, the Bitcoin-based credit market is projected to surge from around US$16 billion today to US$130 billion by 2030, according to the Bitcoin Digital Credit Report compiled by Apyx and BitcoinTreasuries.net. A Protocol Theory survey earlier this year of 1,244 crypto holders in the US and Australia found 88% of respondents considered taking out a crypto-based loan or credit product. The figure indicates strong demand from digital asset owners who want to leverage their BTC holdings without having to sell them.

Going forward, the question is how quickly regulators in various jurisdictions, including Indonesia, can adjust legal frameworks to accommodate this kind of innovation. If successful, fixed-rate crypto-based loans could become a common financial instrument, expanding financing access for individuals and businesses. However, without adequate oversight, default risk and collateral volatility remain shadows to watch.