Coinbase has launched its first fixed-rate, fixed-term bitcoin-backed loan through Morpho Midnight. Eligible U.S. users outside New York can pledge bitcoin as collateral and borrow USDC, with the interest rate and repayment date set before the loan begins. The structure makes borrowing costs and repayment timing easier to plan than Coinbase's earlier product, which used floating rates and had no fixed maturity. As of September 22, 2026, Coinbase had not disclosed the interest-rate range, borrowing limits or available loan terms.
Midnight Sets the Rate and Maturity Up Front
Coinbase already offered USDC loans backed by bitcoin, but the rate on those loans could change with market conditions. Borrowers also had no fixed final repayment date and could choose when to repay as long as their collateral position remained healthy. Through Morpho Midnight, the rate and maturity are determined before funds are advanced.
Merlin Egalite, Morpho's co-founder, said the product is Coinbase's first fixed-rate lending offering and is powered by Morpho Midnight. The basic structure allows users to continue holding bitcoin while using it as collateral to obtain the digital dollar USDC, with the financing cost established in advance.
A fixed rate does not mean every loan condition is already known. Coinbase has not disclosed the product's rate range, minimum or maximum loan size, or the specific maturities available to users. Those parameters will directly affect both borrowing costs and repayment planning.
Bitcoin Is Converted to cbBTC Before Entering Morpho
Under Coinbase's lending setup, bitcoin held within the Coinbase ecosystem is first converted into the company's tokenized bitcoin, cbBTC. The asset then moves through the Base network into a Morpho smart contract, while the borrower receives USDC in a Coinbase account.
Coinbase serves primarily as the customer-facing entry point; Coinbase does not directly hold the loan ledger. Morpho operates the underlying lending markets and related smart contracts. Coinbase's earlier bitcoin-backed loan used Morpho Blue. Midnight is not a replacement for Blue, but adds a fixed-rate, fixed-maturity market design on the same broader infrastructure.
Supply and Demand Set the Borrowing Rate
Morpho Midnight's interest rate is not simply quoted by a bank or platform. Borrowers and lenders trade standardized debt and credit units in separate but related markets, with market prices determining the effective borrowing rate.
A debt unit represents the borrower's obligation to repay 1 USDC at maturity. A credit unit represents the lender's right to receive 1 USDC on that same date. Morpho's product example shows that if a unit paying 1 USDC at maturity is bought for 0.95 USDC, the implied return is about 5.26%, before fees and losses.
Debt and credit units with the same maturity can replace one another after matching. The design is intended to reduce the risk that users become dependent on a single counterparty when market liquidity is limited. For customers, the interface is closer to a conventional loan. Underneath, however, the rate is still determined by supply, demand and pricing in an on-chain fixed-income market.
Coinbase-Related Loan Balance Reaches $1.56 Billion
Recent Coinbase on-chain lending data made available through Dune Analytics showed approximately $3.6 billion in related collateral, about $1.56 billion in outstanding loans, roughly $3.07 billion in cumulative lending and around 53,000 active borrowers.
This is not the first expansion of the bitcoin lending relationship between Coinbase and Morpho. Coinbase launched bitcoin-backed USDC loans through Morpho Blue on January 16, 2025. Morpho later launched Midnight on Base on July 21, 2026, using cbBTC and USDC and adding fixed rates and maturities to its lending infrastructure. By placing Midnight directly inside a customer-facing Coinbase product, the latest launch extends this on-chain credit structure to a broader group of exchange users.
Fixed Rates Do Not Remove Liquidation or Maturity Risk
Locking in the interest rate does not shield the loan from bitcoin price movements. If bitcoin falls far enough for the loan-to-value ratio to exceed the limit set by the relevant market, the collateral may still be liquidated. Borrowers must also manage a fixed repayment date: the debt is due when the stated term ends.
Compared with an open-ended Morpho Blue loan, Midnight makes the borrowing period and repayment date explicit. That can reduce uncertainty from future rate changes for users planning their financing costs. But if a borrower cannot repay at maturity, or if the collateral loses significant value during the term, the fixed deadline becomes a funding obligation that must be addressed first.
The product places two familiar features of traditional lending—an agreed rate and a defined maturity—inside an on-chain borrowing structure. Bitcoin is converted into cbBTC, transactions are carried out on Base, Morpho operates the credit market, and USDC is ultimately delivered to the Coinbase account. Coinbase has yet to disclose the specific rates, borrowing limits and term choices.