Coinbase is expanding its crypto lending services, allowing users to borrow up to $1 million in USDC using Ethereum as collateral.
Quick Summary – TLDR:
- Coinbase now supports ETH-backed loans through the Morpho protocol on its Base network
- Borrowers can get up to $1 million in USDC without selling their ETH, avoiding taxable events
- The launch follows $1.25 billion in BTC-backed loans already issued
- ETH is just the start, with more collateral options planned soon
What Happened?
Coinbase has introduced a new feature letting eligible users borrow up to $1 million in USDC using Ethereum (ETH) as collateral. The move comes on the heels of its successful Bitcoin-backed lending program, which has already processed over $1.25 billion in loans.
This expansion further solidifies Coinbase’s position in the booming onchain credit market, now powered by the Morpho protocol on Base, the exchange’s Layer 2 blockchain.
🔥 NEW: Coinbase has announced it will be offering ETH-backed loans up to $1,000,000 in the U.S. pic.twitter.com/6eKEUhB6AY
— CoinDesk (@CoinDesk) November 20, 2025
How the ETH-Backed Loan System Works?
Coinbase’s ETH loan product allows users to leverage their long-term crypto holdings without selling them, offering a tax-efficient way to access liquidity. Instead of parting with their ETH, users can deposit wrapped ETH (WETH) as collateral and receive USDC, a stablecoin backed by Circle.
Here’s what borrowers can expect:
- Borrow up to $1 million in USDC.
- Use WETH as collateral (support for staked ETH or cbETH is coming soon).
- No fixed repayment term.
- Loan-to-value (LTV) ratio up to 75 percent.
- Liquidation threshold at 86 percent.
- Interest rates are variable, driven by supply and demand on Morpho.
Ben Shen, Coinbase’s Senior Product Director, said it best:
The platform’s interface simplifies the lending process for users, while the actual lending activity happens on the Morpho DeFi lending protocol, all built on Coinbase’s Base network.
Coinbase’s Lending Ambitions Are Growing
Coinbase has made it clear this is just the beginning. According to internal figures, its BTC-backed loan product has already serviced over 16,000 customers, with $1.25 billion borrowed against roughly $1.38 billion in posted collateral. With Ethereum now added, the platform is clearly aiming to scale up its onchain lending services.
In fact, Coinbase recently increased the Bitcoin loan limit to $5 million, showing growing confidence in its credit risk models and infrastructure. ETH loans are currently capped at $1 million, but that may evolve as the product matures.
The launch aligns with broader trends in the crypto world. A Galaxy Research report noted that crypto-collateralized loans reached $73.6 billion in Q3, a record-breaking figure. DeFi platforms now account for more than half of all outstanding crypto-backed loans, underscoring a shift away from centralized lenders toward decentralized finance.
Coinbase plans to expand beyond the U.S., though currently, the ETH-backed loans are available to verified U.S. users only, excluding New York due to regulatory restrictions.
SQ Magazine’s Takeaway
I think this is a pretty big deal. Coinbase is making it easier for long-term crypto holders like us to access serious liquidity without selling off assets and triggering taxes. That’s a game changer. What stands out is not just the size of the loans, but how simple they’ve made the process through Morpho and Base. Whether you’re looking to finance a big purchase or just want more flexibility, this puts more power in your hands. Plus, it’s nice to see Coinbase leading in a space that’s rapidly moving away from banks and toward decentralized systems.
