Coinbase has launched a new fixed-rate loan product that lets customers borrow USDC using bitcoin as collateral. The new service gives borrowers something Coinbase’s existing bitcoin-backed loans do not: a fixed interest rate and a fixed repayment date.

The loans are powered by Morpho Midnight, a lending protocol designed for fixed-rate and fixed-term digital asset loans.

The basic idea is simple. A customer puts up bitcoin as collateral and receives USDC without having to sell the bitcoin. The borrower then repays the USDC, plus interest, by the agreed deadline.

For bitcoin holders who want access to cash or stablecoins while keeping their BTC exposure, this provides another borrowing option.

Coinbase already offers bitcoin-backed loans through Morpho Blue. Those loans have variable interest rates, meaning the rate can change depending on supply and demand.

The new product works differently. The interest rate and repayment date are agreed when the loan starts and do not change during the loan. That gives borrowers a clearer idea of how much the loan will cost.

“Coinbase Borrow gives our customers access to liquidity without having to sell their assets, and fixed-rate borrowing gives them even greater choice over how they manage that credit,” said Jacob Frantz, Coinbase’s yield and investments product lead.

However, a fixed rate does not mean the loan is risk-free.

The biggest difference is the repayment deadline. Borrowers must repay the loan before maturity. If they fail to do so, the lender can claim the bitcoin-backed collateral under the loan’s terms.

Bitcoin’s price also remains important. If BTC falls sharply, the value of the collateral can drop compared with the amount borrowed. If the loan-to-value ratio reaches the permitted limit, the position can be liquidated.

Compared with a variable-rate loan, a fixed-rate loan removes the uncertainty of changing interest costs but introduces a clearly defined repayment deadline.

The new fixed-rate product is being added alongside Coinbase’s existing variable-rate lending service.

The company said its Morpho-powered variable-rate loans have grown to more than $1.4 billion in active or outstanding loans, backed by around $3 billion in collateral.

Morpho Midnight uses an offer-based system. Lenders can make offers with specific interest rates and repayment dates, while borrowers can choose from the available terms.

Coinbase currently offers loans that mature at the end of the current month or the following month. The company has said that its “End of Month” date means the final Friday of the selected month.

Morpho co-founder and CEO Paul Frambot said the company wants to build on its existing work.

“We’re now building on that foundation and starting to scale: new loan types and use cases, bringing onchain credit one step closer to the scale and diversity of global credit markets,” he said on X.

Coinbase’s move comes as the market for bitcoin-backed credit continues to develop.
Fixed-rate Bitcoin loans are not new. Companies such as Ledn and SATL Lending have offered similar products for years.

Coinbase’s approach is different in that the loan is handled on-chain through decentralized finance infrastructure while being offered directly through a major consumer digital asset platform.