Coinbase Bitcoin Loans: Where Your BTC Goes and the Sell Line

On 22 September 2026, Coinbase started letting users borrow dollars against their bitcoin with the interest rate and the repayment date set from day one. The Block reported them as loans “with an interest rate and repayment date set when they take out the loan.”

That sounds simple. But Coinbase’s own borrow page, which describes its older flexible loans, contains a line most headlines skipped: “Coinbase cannot prevent your collateral from being liquidated on Morpho.” For anyone with a large bitcoin position who keeps weighing whether to sell some or borrow against it, that line matters more than the rate. Here is what launched, where the bitcoin goes, and a four-question check you can run on any loan against your crypto. We do not quote rates, and nothing here is a suggestion to borrow or not to borrow.

What did Coinbase launch?

Coinbase added fixed-rate loans that let users borrow USDC, a dollar stablecoin, against their bitcoin. A stablecoin is a token designed to track the dollar, so the loan is meant to hold its value while the bitcoin behind it can swing.

CoinDesk reported the same thing the next day: the rate and repayment date are set at the time of borrowing. A fixed rate means the interest does not move after you borrow, even if other borrowing costs rise. That differs from Coinbase’s older loans, where CoinDesk says the rate changes with supply and demand.

Jacob Frantz, a product lead at Coinbase, told The Block that Coinbase Borrow gives customers access to liquidity without having to sell their assets. The Block also reports that a Coinbase spokesperson declined to share the interest rates on offer. So the reports say the rate is fixed, but not what it is.

How does the loan work behind the app?

The Block lays it out in one line: Coinbase manages the app experience, Morpho provides the lending protocol, and transactions settle on Base. CoinDesk describes Base as Coinbase’s Ethereum layer 2 network, a blockchain built on top of Ethereum.

Morpho is a lending protocol: software on a blockchain that matches lenders and borrowers by fixed rules instead of a bank desk. CoinDesk describes Morpho Midnight, the version used here, as a decentralized, non-custodial protocol for fixed-rate, fixed-term loans, launched in July. According to The Block, rates are set by supply and demand as lenders and borrowers place offers on an onchain order book. Think of a notice board where lenders post what they will lend at, borrowers post what they will pay, and the matches become loans.

For scale, Morpho’s post says Coinbase’s older variable-rate loans, which run on Morpho Blue, have grown to more than $1.4 billion in active loans backed by about $3 billion of collateral. The Block notes the figures come from Coinbase. That is roughly two dollars of crypto locked for each dollar borrowed, and that cushion is the part to watch when prices move.

If you want a wider view of how these loans fail under pressure, our post on what $1 billion in liquidations shows holders walks through the mechanics.

Where does your bitcoin actually go?

Your bitcoin leaves your regular Coinbase balance. Coinbase’s borrow page, written for its flexible loans, says that when you borrow, your bitcoin is converted to Coinbase Wrapped BTC (cbBTC) and transferred to a Morpho smart contract, where it is held as collateral.

In plain English, the coin gets a wrapper so it can work on Base, then sits inside a program on the blockchain. Morpho’s Coinbase page says Coinbase abstracts the blockchain, wallets, gas fees and wrapping, meaning the app hides those steps. They still happen whether you see them or not.

We covered a related Coinbase product, its USDC lending through Morpho vaults, in what a Coinbase account freeze means for custody.

What does a fixed rate not fix?

A fixed rate fixes the cost of the loan, not the value of the collateral. Four points follow from the sources.

1. The price can still move. The interest stays put while the bitcoin backing the loan rises or falls.
2. There is a sell line. Coinbase’s borrow page says your loan to value (the loan’s size compared with what the collateral is worth right now) must stay under 86%. If it reaches 86%, the collateral is liquidated, meaning sold, to repay the loan and cover a penalty fee. The page describes the older flexible loans and does not say whether the same line applies to fixed-rate ones.
3. There is a due date. The Block reports the loans are currently due at the end of the current or next month, and a spokesperson said end of month means the last Friday. Borrowers must repay before maturity.
4. The app is not the decider. The Block explains that while the loan is open, the lender has a claim on the collateral. Coinbase’s page says Coinbase cannot prevent liquidation on Morpho. Once the rules say sell, the app you used is not the one making that call.

Coinbase’s page also says loans are available in the US to start, excluding New York State.

What are the main risks?

The sources point to five, in plain terms:

• Collateral price. The sell line on Coinbase’s page is tied to the collateral’s market value.
• Penalty fee. A liquidation also covers a penalty, so a forced sale costs more than the loan alone.
• Calendar. A fixed term means the cash has to be ready by the due date.
• Code. The collateral sits in a smart contract, and code can have flaws. Coinbase’s page states that no representation or warranty is made.
• Missing terms. The fixed-rate terms were not published in the reports we read, so they have to be read in the app.

A new way to borrow says nothing about where bitcoin’s price goes. Our post on 3x leveraged ETF liquidations covers why borrowed exposure behaves differently in a fast drop.

The four-question borrow check

Here is a template you can keep for any loan against your crypto. We filled it in for Coinbase’s product as of 14 October 2026, and for a made-up borrower who only looked at the rate.

Question	Coinbase fixed-rate loan	Made-up borrower
What is locked, and where does it sit?	Bitcoin, wrapped as cbBTC, in a Morpho smart contract (per Coinbase’s page)	Some bitcoin, not sure where
Where is the sell line, and what fee comes with it?	86% on the borrow page; not stated for fixed loans	Unknown
When is it due, and what if it is not repaid?	End of this month or next (per The Block)	Unknown
Where would repayment come from without selling the coin?	Yours to answer: write it down with the date	A hope that the price goes up

Four blanks, and each one takes a minute to fill in. The check is not a signal to borrow or not to borrow. It is a short list of what a loan locks up, when it is due, and what would force a sale.

What would change this view?

Our reading rests on Coinbase’s own dated pages. It would change if:

• Coinbase shows it can step in and stop a liquidation. The who-holds-what point would change.
• The fixed-rate loans turn out to have no sell line. The price-risk point would matter less for them.
• The collateral stays in your normal Coinbase balance. The custody point would change.

What should holders watch next?

• Whether Coinbase publishes terms for the fixed-rate loans on its borrow page.
• Whether the 86% line applies to fixed loans, or whether they have their own.
• The due dates on offer, and how much is lent through Midnight. The Block cites a spokesperson putting deposits at around $30 million at launch.
• Other platforms. The Block says more integrations are expected, but none were named.

Each should show up on Coinbase’s borrow page or in Morpho’s own posts first. If another platform announces a loan against your crypto, find its own loan page and run the same four questions.