Coinbase has launched crypto-backed lending services for UK customers, allowing them to use Bitcoin, Ethereum, and cbETH holdings as collateral to access USDC loans. The NASDAQ-listed exchange's expansion comes amid significant turmoil in the decentralized lending sector, where the recent $292 million KelpDAO exploit has triggered over $6 billion in withdrawals from leading protocols like Aave. UK users can now instantly convert collateralized crypto assets into spendable USDC or fiat currency while their digital assets remain secured in Morpho vaults.

UK customers can now borrow USDC from Coinbase 

Coinbase’s blog today April 20 unveiled that UK Coinbase users can borrow USDC against their BTC and ETH holdings almost instantly, with up to 3.5% APY in USDC rewards automatically kicking in for Coinbase One members. However, they have to manually opt out if they don’t want it. 

BTC holders can borrow up to $5 million in USDC according to the release, as long as they have the BTC in their portfolio. Morpho handles most of the backend stuff, putting the assets up as collateral in its smart contracts and paying out the USDC loans, while Coinbase handles the frontend, from where customers can use the USDC as they want. 

According to Dune dashboards, close to $2.3 billion of the total amount of loans processed on Morpho have originated from Coinbase, more than double the $1 billion milestone the company celebrated in October 2025. 

The UK launch comes one year after Coinbase rolled out the service to US users, excluding those in New York. 

The UK operation of the US-founded exchange is run by CB Payments, Ltd., a specific subsidiary that is recognized as an Electronic Money Institution by the FCA, having registered with the regulator in February 2025. It has also overseen the rollout of DEX trading in April 2026 and, before that, the launch of savings accounts in November 2025. 

Morpho gains prominence as Coinbase expands credit line 

All of Coinbase’s crypto-backed loan business is directed to Morpho, a permissionless decentralized lending platform built on Base, the Ethereum L2 network backed by Coinbase. 

For now, only BTC and ETH are available for UK borrowers, while US users already have access to loans backed by their XRP, DOGE, ADA, and LTC holdings.

Just last month, Cryptopolitan reported that Coinbase and Better Home & Finance will now allow US home buyers to access credit facilities against their crypto for their mortgages. 

Coinbase also has USDC lending options for users, offering up to 4.1% in rewards on USDC that users commit to the program, which runs through an on-chain integration with Morpho.   

The activity from Coinbase contributes to Morpho being the second-largest crypto lending platform per Defillama data, holding about $6.6 billion in total value locked (TVL) as of April 20, about double the amount held in Justlend, the next largest venue for on-chain borrowing. It also has over $3.7 billion in active loans, second only to  Aave. 

Notably, the platform saw  more than $1 billion pulled out from its vaults in part of the DeFi contagion from the KelpDAO $292 million hack that rocked markets on April 18. Aave, the leading lending market, is approaching $10 billion in lost TVL since the event.

Another thing to look out for as a borrower is the liquidation threshold of collateral. According to Coinbase, “If the amount of your loan, including accrued interest, reaches a certain threshold relative to the value of your collateral, liquidations are triggered.”

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