Coinbase Just Supercharged Crypto Loans: XRP, ADA, DOGE & LTC Now Accepted as Collateral
Coinbase just tore up the old rulebook for crypto-backed lending. The exchange's loan program—once limited to a handful of blue-chip assets—just got a major expansion, welcoming four of the market's most recognizable altcoins into the collateral club.
### The New Collateral Contenders
Forget just Bitcoin and Ethereum. Now, borrowers can pledge their holdings in XRP, Cardano (ADA), Dogecoin (DOGE), and Litecoin (LTC) to secure instant cash loans. It's a move that directly taps into the massive, often dormant, value sitting in millions of user wallets across these popular chains.
### Unlocking Idled Capital
The play is straightforward: provide liquidity without forcing a taxable sale. Need fiat for an opportunity or an emergency? Instead of dumping your crypto and triggering a capital gains event, you can now use it as backing for a USD loan. It turns your portfolio from a speculative bet into a functional financial asset—at least on paper.
### A Calculated Risk or a Growth Gambit?
This expansion isn't just a user perk; it's a strategic depth charge in the battle for institutional and sophisticated retail clients. By accepting more volatile assets as collateral, Coinbase is betting on both the long-term viability of these networks and its own risk models. They're essentially saying these four altcoins are stable enough to bank on—a significant nod of legitimacy from a publicly-traded US giant.
Of course, in traditional finance, using a meme coin as loan security would get you laughed out of the bank. But in crypto, it's just another Tuesday—proof that when the rules are being written on the fly, even the joke can become collateral.
How Coinbase Loan Collateral Works for XRP, Cardano, Dogecoin & Litecoin
Borrowing Through Morpho
The way Coinbase loan collateral works is fairly straightforward. A user deposits supported crypto into a vault, draws USDC against it based on a loan-to-value ratio, and then repays the amount plus interest to reclaim the collateral. Coinbase loans Morpho infrastructure handles the on-chain side of things, keeping collateralization ratios verifiable at any point. USDC borrowing on Coinbase has already approached $2 billion in originations, according to a Dune dashboard.
Bitcoin was the first supported asset, and ethereum was added in November 2024. XRP, Dogecoin, ADA, and LTC — the four new additions — carried a combined market cap of around $117 billion at the time of the announcement, per CoinGecko. Coinbase also reported holding $17.2 billion in XRP on its platform as of December 31, according to an SEC filing, which gives some sense of the potential demand for an XRP collateral loan product specifically.
Liquidation Risk and the Tax Question
Coinbase loan collateral products carry real liquidation risk. When a user’s collateral drops too far in value relative to what was borrowed, third parties are allowed to step in, repay the loan, and claim the collateral at a discount.
A Coinbase spokesperson told Decrypt:
“[Coinbase] enforces an additional buffer when users take out a loan to reduce liquidation risk.”
They also observed that the borrowers are notified when they reach that limit up to every 30 minutes and that the exchange is considering other means through which users can hedge their positions.
There is also a tax angle that USDC borrowers on Coinbase can easily overlook. Law firm Greenspoon Marder LLP notes that since users wrap their assets before posting them as collateral on-chain, the U.S. treats that swap as a taxable event. Liquidations can create further tax obligations on top of that. Coinbase loans Morpho users should be aware that Coinbase has stated clearly it does not provide tax advice, and that Coinbase loan collateral users are responsible for their own reporting.
For dogecoin and Litecoin holders in particular, this kind of product fills a real gap. Unlike Ethereum or Cardano, neither Dogecoin nor Litecoin supports native staking, so right now a Coinbase loan collateral setup stands as one of the only productive ways holders can put those assets to work without selling them. Holders who consider an OGEcoin collateral loan model find the same appeal — borrowing against an asset rather than selling it drives the core attraction.
