Coinbase Launches Ethereum-Backed Loans for U.S. Users, Offering Up to $1M in USDC Without Selling ETH
Coinbase has rolled out a new Ethereum-backed lending service for eligible U.S. customers, allowing users to borrow up to $1 million in USDC without selling their ETH holdings, the exchange announced this week.
The service—which excludes users in New York due to state regulations—marks one of Coinbase’s most significant integrations with decentralized finance (DeFi) to date, expanding the company’s crypto-native credit offerings.
Borrowing Against ETH Without Triggering Taxes
The offering enables customers to deposit ETH as collateral in exchange for USDC loans, giving users liquidity while retaining exposure to Ethereum’s market performance. Because the ETH is not sold, borrowers avoid creating a taxable event—a key benefit for long-term holders.
Coinbase recently raised its borrowing limit for Bitcoin-backed loans to $5 million, and the new ETH-based feature follows that expansion.
Powered by Morpho on Base
Loans are executed through Morpho, a lending protocol operating on Base, Coinbase’s Layer-2 network. Coinbase provides the platform interface, while Morpho’s smart contracts handle the decentralized loan execution.
Borrowers must maintain a loan-to-value (LTV) ratio below 86% to avoid automatic liquidation, reflecting the risk of sharp crypto price swings. Coinbase confirmed it will expand collateral options soon, including cbETH, its staked Ether derivative.
Growing Demand for Crypto-Backed Credit
Interest in on-chain borrowing has surged across the Base ecosystem, with lending volume surpassing $1.25 billion. Morpho has seen accelerated deposits in recent weeks as traders and long-term investors tap collateralized loans for liquidity while keeping their crypto positions intact.
The launch positions Coinbase more deeply within the growing crypto-credit market, reinforcing its strategic push toward decentralized finance integration and supporting broader institutional adoption of crypto-backed lending.
