Key Takeaways:

• UK users can now take out loans using Bitcoin and Ether as collateral, avoiding the need to sell their assets.
• Loans in USDC can be approved and delivered in under a minute directly through the Coinbase app.
• Users have the flexibility to repay the loan on their own schedule, rather than following strict timelines.

Coinbase has launched a new feature in the United Kingdom that allows users to borrow money without selling their crypto. The company is now offering crypto-backed loans, enabling customers to borrow USDC (USDC) using their Bitcoin (BTC) and Ether (ETH) as collateral.

The process is designed to be fast and simple. According to Coinbase, users can access funds in under a minute, giving them quick liquidity while still holding onto their long-term crypto investments.

The feature is powered by Morpho, an onchain lending protocol built on Coinbase’s Base network, and currently supports BTC, ETH, and cbETH.

How Coinbase crypto loans work

For those new to crypto, the idea of borrowing against digital assets may sound complex, but it’s actually quite straightforward.

Instead of selling Bitcoin or Ether when users need cash, they can use it as collateral to take out a loan. Think of it like using a house or car to secure a traditional loan.

Here’s how it works in simple terms:

• Users deposit their BTC or ETH into Coinbase as collateral.
• Coinbase (via Morpho) lends them USDC based on that value.
• The USDC appears in their account almost instantly.
• Users can convert it to British pounds (GBP) or send it anywhere globally.

The amount users can borrow depends on how much crypto they put up. In some cases, users can borrow up to $5 million in USDC if they have sufficient collateral.

Importantly, the crypto isn’t sold; it remains in users’ wallets as long as the users maintain the loan conditions.

Learn More: What Is Layer-1 Blockchain?

What changes for everyday crypto users?

This feature is especially important for beginners and long-term investors.

One of the biggest challenges in crypto is needing cash without wanting to sell assets, especially if the user believes prices will rise in the future. Selling means giving up potential gains and, in some cases, triggering taxes.

Crypto-backed loans solve this problem by offering:

• Quick access to cash without selling investments
• Flexibility, with no fixed repayment schedule
• Global usability, since USDC can be sent anywhere for free
• Control, as users can monitor their loan health directly in the app.

For example, someone could use this feature to cover unexpected expenses, fund a purchase, or manage short-term cash flow, all without exiting their crypto position.

Coinbase One members can also earn up to 3.5% APY on USDC, adding another layer of utility.

Related: Circle Introduces USDC Nanopayments for AI Agents

Risks and what users should know before borrowing

While crypto-backed loans are convenient, they are not risk-free.

The biggest risk is liquidation. If the value of Bitcoin or Ether drops significantly, your collateral may no longer cover the loan. In that case, part of your crypto could be automatically sold to repay it.

Interest rates are also variable, meaning they can change frequently based on market conditions.

To help manage this, Coinbase provides tools in the app where users can track loan health in real time, receive alerts if their collateral is at risk, and view interest rate changes and repayment options.

The company emphasizes that there is no fixed repayment deadline, giving users flexibility, but it’s still important to monitor the loan carefully.