Catenaa, Friday, April 24, 2026- Coinbase has expanded its crypto-backed lending service to the United Kingdom, allowing eligible users to borrow USDC against Bitcoin, Ethereum, and Coinbase wrapped staked Ethereum through Morpho on Base, according to a company statement released Monday.
The service enables users to access loans of up to 5 million dollars in USDC while pledging supported crypto assets as collateral. The assets are transferred onchain into a Morpho smart contract and remain locked until the loan is fully repaid.
Coinbase said the system is designed as an overcollateralized lending product, meaning users must deposit more crypto value than the amount they borrow. The structure is intended to reduce risk for lenders while allowing borrowers to access liquidity without selling their holdings.
Onchain lending model expands via Base network
Borrowers can initiate loans directly through the Coinbase app by selecting the “Borrow” feature, choosing a collateral asset, and specifying the desired USDC amount. Once submitted, Morpho processes the loan and transfers USDC to the user’s Coinbase account within seconds.
Users can then convert USDC into British pounds or transfer it externally. Coinbase said the lending system operates on variable interest rates determined by Morpho’s protocol, with rates adjusting frequently based on market conditions on the Base Layer 2 blockchain.
Unlike traditional credit products, the loans do not follow a fixed repayment schedule. Borrowers can repay at any time, but liquidation occurs automatically if collateral value falls below required thresholds after accounting for interest and market movements. Users receive alerts through email and SMS when liquidation risk increases.
Expansion follows US rollout and rising demand
The UK launch follows Coinbase’s earlier introduction of crypto-backed loans in the United States, which initially began with Bitcoin collateral and later expanded to additional assets including Ethereum and other major tokens. The service was built in collaboration with Morpho, a decentralized lending protocol that matches liquidity onchain.
Coinbase has reported strong growth in its lending program since its US debut, with cumulative loan originations surpassing 2 billion dollars in USDC as of April 2026. The company has gradually expanded the eligible collateral set and increased borrowing limits over time as demand for crypto liquidity products has grown.
The expansion into the UK reflects broader efforts by major exchanges to integrate decentralized finance infrastructure into mainstream financial services. By combining centralized onboarding through Coinbase with decentralized lending execution via Morpho, the product aims to bridge traditional user access with onchain financial systems.
Crypto lending demand rises amid market volatility
Crypto-backed lending has gained traction as holders seek liquidity without selling assets during volatile market cycles. Bitcoin and Ethereum holders in particular have increasingly used collateralized borrowing to access cash or stablecoins while maintaining long-term exposure to digital assets.
Industry analysts note that overcollateralized lending reduces credit risk but introduces liquidation risk during sharp market downturns. Rapid price declines can trigger automatic asset liquidation, making risk management a central feature of such systems.
Coinbase said its platform includes automated alerts designed to help users manage collateral levels and avoid forced liquidation. The company also emphasized that interest rates are dynamic and reflect real-time supply and demand conditions within the protocol.
Base network plays central role in expansion
The lending system operates on Base, Coinbase’s Layer 2 blockchain, which is designed to support faster and lower-cost transactions compared with Ethereum’s main network. By using Base, Morpho can adjust interest rates and execute loan updates in near real time, tied to block production.
This infrastructure allows lending terms to evolve continuously based on market activity, rather than being fixed at the time of loan issuance. Coinbase said this improves capital efficiency and allows more responsive risk pricing.
Coinbase plans to expand its crypto-backed lending services to additional markets over time as regulatory clarity and infrastructure maturity improve. The company views lending as part of a broader strategy to integrate decentralized financial tools into mainstream crypto usage.
As demand for stablecoin liquidity and collateralized credit continues to grow, crypto lending products are expected to remain a key area of expansion across both centralized and decentralized platforms.
