Coinbase added Bitcoin-backed borrowing for US users, and on the surface it looks like the simplest loan in the market: tap a few buttons, borrow against your BTC, funded in about a minute. Underneath, it is a decentralized finance (DeFi) product wearing a Coinbase interface, and that changes the risks in ways worth understanding before you use it. It has grown fast: Morpho reports more than $2.17 billion borrowed through the product and over 90,000 users as of April 2026.
This is an independent review. We are not affiliated with this product, and nothing here is financial advice. Figures are drawn from Coinbase and Morpho materials and reputable coverage as of mid-2026; because the rate floats and some terms are not published on a single public page, treat specific numbers as a snapshot and confirm them in the app.
What Coinbase offers
A way to raise cash against your Bitcoin without selling it, settled almost instantly and with no origination fee. You borrow up to $5 million against BTC, pay no minimum monthly amount, and repay whenever you like while your loan stays healthy. What makes it unusual is not the terms but the plumbing: the loan is a DeFi position with a Coinbase front end, so the lending, the rate-setting, and the liquidation all happen in smart contracts rather than on Coinbase's balance sheet.
How the loan works
The mechanics are the whole story, so it is worth spelling out:
- Your Bitcoin is converted one-to-one, at no cost, to Coinbase-wrapped Bitcoin (cbBTC).
- The cbBTC is supplied as collateral into a Morpho market on the Base network. The USDC you borrow comes from lenders who deposit into a Morpho vault curated by a third party, Steakhouse Financial, which sets the market and risk parameters. Coinbase does not curate it.
- You receive USDC, a stablecoin, not US dollars. Turning that USDC into spendable dollars is a separate step you take yourself.
So while it carries the Coinbase brand, Coinbase is essentially the front end and the custodian of the wrapped Bitcoin; the borrowing itself runs on Morpho. For why that distinction matters in general, see our guide to CeFi vs DeFi Bitcoin loans.
The rate, and why it moves
The rate is variable. It is set by Morpho's AdaptiveCurveIRM model from supply and demand for USDC in the market, targets around 90 percent utilization, and updates roughly every block. It has recently sat around 5 to 6 percent, which is often lower than a centralized lender, but there is no ceiling, so a spike in borrowing demand can push it up. There is no fixed-rate option. For where centralized US lenders' rates sit by comparison, see the BOB Bitcoin Loan Rate Index.
Where your Bitcoin actually sits
This is the part most coverage gets wrong, and it has two layers.
First, your collateral is cbBTC locked in the Morpho market. By Morpho's design, supplied collateral is held in the market contract and is not re-lent the way a centralized lender might rehypothecate it, and you can verify the position on the Base block explorer. That on-chain transparency is a genuine strength.
Second, and less advertised: cbBTC is itself backed one-to-one by real Bitcoin that Coinbase custodies, with a Chainlink proof-of-reserve feed. So you are not escaping custodial trust, you are relocating it. You trust Coinbase to hold the underlying BTC and the smart contracts to behave. Legal commentators have also noted that Coinbase's terms do not clearly spell out whether collateral is segregated per borrower, so read the loan terms directly before relying on any single characterization.
Liquidation: automatic, with no cure window
The position is liquidated automatically onchain once your loan-to-value reaches the market threshold, 86 percent for the BTC market (the "LLTV"), with a penalty Coinbase states at about 4.38 percent. It can be triggered by a falling price or simply by interest accruing onto your balance over time.
You get warning notifications as you approach the threshold, but there is no guaranteed grace period and no human to call to buy time. Liquidation can be partial or full, and you keep any collateral left after the debt and the liquidator's incentive are covered. Borrowers used to a centralized lender's cure window should not assume one here. For how thresholds work in general, see margin calls and liquidation.
Other collateral, and the tighter tier
Coinbase expanded the product well beyond Bitcoin through 2026: up to $1 million against ETH and staked ETH (cbETH), and up to $100,000 against XRP, Dogecoin, Cardano, Litecoin, and Solana. One thing to flag: the altcoin markets liquidate at a lower 62.5 percent LTV, a much tighter buffer than the 86 percent on BTC and ETH, so they carry materially more liquidation risk for the same price move.
Key facts
- Rate: variable, set by Morpho's AdaptiveCurveIRM, recently around 5 to 6 percent, no published ceiling.
- No origination fee, no minimum payment, and no fixed due date while your loan-to-value stays healthy.
- Borrowing limit up to about $5 million against BTC (raised to that level in late 2025).
- Loan-to-value around 75 percent at origination; automatic liquidation at 86 percent.
- Collateral is cbBTC locked in the Morpho market; the backing BTC is custodied by Coinbase.
- Available to US residents except New York, and in the UK as of April 2026.
The catches to weigh
- You receive USDC, not dollars. You hold a stablecoin until you convert it, which carries its own considerations.
- The rate is variable and uncapped. Your cost can rise with the market; there is no fixed-rate option.
- Liquidation is automatic and immediate. No human grace period, unlike many centralized lenders.
- Two layers of trust. Smart-contract and oracle risk on Morpho, plus Coinbase's custody of the BTC backing cbBTC.
- Availability. Offered to US residents except New York (and the UK) as of this writing.
Tax
Borrowing against Bitcoin is generally not a taxable event, because you are borrowing rather than selling. The one-to-one conversion to cbBTC is a genuinely unsettled question: there is no IRS guidance, and tax professionals disagree on whether wrapping is a taxable swap or a non-event. A liquidation, however, is a disposition of your crypto and can be taxable. Read our explainer on whether borrowing against Bitcoin is taxable and confirm your situation with a CPA. This is not tax advice.
The separate Coinbase mortgage
Worth clearing up, because the names blur: Coinbase and Better also launched a Bitcoin-collateralized mortgage in 2026, and the first Fannie Mae-eligible one closed in June 2026. That is a different product on different rails, a conforming home loan plus a private down-payment loan secured by crypto held in Better's custodial account on Coinbase Prime. It is not the cbBTC-on-Morpho USDC loan reviewed here.
How Coinbase compares
Coinbase's loan is not directly comparable to the US dollar loans in our main comparison, because it pays a stablecoin, floats its rate, and uses smart-contract custody on top of Coinbase's BTC custody. That is exactly why we cover it here rather than in the table. If you want US dollars from a company with a defined cure period and human support, a centralized lender is a different tool: compare the US options, including custody and rehypothecation posture, in our comparison table, and see where their rates stand in the BOB Bitcoin Loan Rate Index. If avoiding any re-lending of your collateral is the priority, our lenders that do not rehypothecate page is a good start.
Who it suits
The Coinbase loan fits someone who already holds BTC on Coinbase, wants liquidity fast, is comfortable holding USDC, and understands they are using a DeFi protocol with automatic liquidation on top of Coinbase's custody. If you would rather borrow US dollars from a company with a cure period and a support line, start with our Bitcoin loan comparison instead.