Coinbase Expands Into ETH-Backed Institutional Lending
- Coinbase launches ETH-backed USDC loans through Morpho and Base, expanding credit.
- LTV caps, liquidation thresholds, and variable rates shape risk controls for ETH borrowers.
- Rising on-chain lending boosts demand for ETH-backed liquidity without asset sales.
Coinbase has launched Ethereum-backed loans for U.S. users, allowing borrowing of up to $1 million in USDC without selling their ETH holdings. The service uses Morpho’s DeFi infrastructure on the Base network. This initiative positions Coinbase as a crypto-native prime broker catering to both institutional and retail demand for liquidity without liquidation.
ETH Loans Offered Through Morpho and Base
The new loan product operates through Morpho, a decentralized lending protocol, while Coinbase provides the user interface for borrowers. Users deposit ETH as collateral and receive USDC instantly, maintaining exposure to Ethereum’s market movements.
Borrowers must manage their loan-to-value (LTV) ratio, which has a 75% borrowing cap and leads to liquidation at 86% indicating market volatility considerations. The program is available across most U.S. states, excluding New York, due to regulatory restrictions.
Coinbase plans to expand support to additional assets, including loans backed by staked ETH derivatives like cbETH. On-chain lending on Base has surpassed $1.25 billion in total originations with $810 million in active loans across over 13,500 wallets.
Interest rates for ETH-backed loans change based on supply and demand on Morpho. Borrowers can get cash without selling their ETH, which means they avoid creating a taxable event. This fits what institutions want: access to capital while still holding their long-term crypto positions.
Strategic Expansion and Product Integration
Coinbase’s ETH-backed loans build on the earlier rollout of Bitcoin-backed loans, where users borrowed against about $1.38 billion in BTC. This move is part of Coinbase’s bigger plan to bring DeFi-style products into its centralized platform.
The exchange has also made multiple moves to strengthen its service offerings. In October 2025, Coinbase acquired Echo for $375 million, a platform enabling early-stage project financing. The same month, the company partnered with Citigroup to facilitate transfers between crypto and traditional currencies and expanded crypto staking services in New York.
Coinbase also unveiled a regulated platform for initial coin offerings (ICOs), targeting one token sale per month, starting with Monad’s offering. This indicates a growing focus on delivering diversified financial services within a single platform interface, emphasizing seamless access to crypto-backed lending and investment options.
Related: Coinbase Brings Simplified DeFi Trading to Brazil
Market Context and Institutional Trends
The rollout of ETH-backed loans comes at a time when both big investors and regular users are borrowing more against their crypto. In Q3 2025, crypto-backed lending hit $73.6 billion, the highest it has ever been. More than half of these loans now happen on DeFi platforms, showing that people prefer on-chain lending over traditional centralized options.
By linking up with Morpho, Coinbase is combining the trust of a central exchange with the speed and flexibility of DeFi. Recent market trends after the ETH ETFs show that institutions would rather borrow using on-chain credit than sell their ETH, which signals a more mature market built around strong crypto assets.
The service also appeals to long-term ETH holders needing liquidity for expenses such as debt refinancing or real-world purchases. By unlocking value without asset liquidation, Coinbase positions itself as a key player in crypto-collateralized lending, catering to complicated borrowers.
Coinbase’s ETH-backed loan program shows the exchange’s commitment to expanding crypto-backed credit offerings while integrating decentralized finance protocols. The combination of Morpho’s technology and Coinbase’s platform access has facilitated over $1.25 billion in on-chain loan originations. The initiative supports institutional and retail users, providing a controlled mechanism to access liquidity while retaining crypto exposure.
