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The exchange made the product available to UK customers this month, marking the first significant international rollout of the full borrowing suite, meaning BTC, ETH, and cbETH collateral options together internationally for the first time. The service was originally built for US users in early 2025. Borrowers can pledge BTC, ETH, or cbETH (Coinbase Wrapped Staked ETH) as collateral to receive USDC, a dollar-pegged stablecoin, without needing to sell their holdings. The UK ceiling of $5 million per loan is notably higher than the $1 million cap that applies to ETH and cbETH-backed loans in the United States; whether BTC-backed US loans carry a separate ceiling has not been confirmed, so that comparison is specific to ETH and cbETH collateral.

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How the Product Works

All loans are processed through Morpho, a decentralised lending protocol deployed on Base, Coinbase's own Ethereum Layer 2 chain. There is no fixed repayment deadline; borrowers can repay whenever they choose. Loan terms are governed by smart contracts rather than a human underwriting process, which is what allows the sub-minute disbursement speed.

Interest rates are variable and set by on-chain market conditions. BTC-backed USDC loans have recently priced around 6% APR, which sits below comparable rates from centralised crypto lenders. To avoid automatic liquidation by the smart contract, borrowers must keep their loan-to-value ratio below 86%. If the value of the collateral drops far enough to breach that threshold, the protocol triggers automatic smart-contract liquidation to cover the outstanding debt.

cbETH deserves a brief explanation for readers unfamiliar with it. When a user stakes ETH through Coinbase, they receive cbETH as a receipt token representing that staked position. Accepting cbETH as collateral means a borrower can access liquidity while their ETH continues earning staking rewards. They do not need to unstake or interrupt yield accrual to use the product.

Max Branzburg, Coinbase's VP of Product, said the integration with Morpho was designed to make on-chain financial services broadly accessible. "Together, we've enabled seamless borrowing and lending for our users, empowering them to unlock the value of their crypto without selling it," he said in a statement published by Morpho.

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On-Chain Data

The numbers behind the Coinbase and Morpho partnership are substantial. More than $1.2 billion in USDC loans have originated through the integration since it launched in April 2025, according to Morpho's own data. Active loans on the platform currently total more than $800 million, with cbBTC (Coinbase's wrapped Bitcoin token) accounting for more than $1.4 billion in locked collateral. The platform has attracted over 90,000 active users, and USDC deposits from lenders earning yield on borrower interest exceed $500 million. Morpho's total value locked across all chains passed $10 billion in the fourth quarter of 2025, according to DeFiLlama.

The lending product connects to a companion yield product launched in September 2025. Users who deposit USDC into Morpho Vaults, curated by risk manager Steakhouse Financial, earn a share of the interest paid by borrowers. Coinbase describes this two-sided structure as a "DeFi mullet": a familiar retail app experience on the surface, with permissionless DeFi infrastructure underneath.

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Regional Relevance: South Asian and African Diaspora Communities

The UK launch carries particular weight for diaspora communities who hold crypto positions accumulated over years. The UK's South Asian population numbers more than four million people, and many hold BTC or ETH accumulated over years. India ranks first globally in grassroots crypto adoption according to the Chainalysis 2026 Global Adoption Index, driven by peer-to-peer stablecoin use and remittance demand, a pattern that speaks directly to the financial habits many UK South Asian residents bring with them. Under HMRC rules, converting crypto to fiat is treated as a capital gains disposal. Borrowing USDC against those holdings instead gives users access to pound liquidity without triggering a tax event.

For African diaspora communities in the UK, including Nigerian-British and Ghanaian-British residents, the product provides access to institutional-grade lending infrastructure that is not yet available in most of their countries of origin. Nigeria ranks second globally in crypto adoption in the 2026 Chainalysis index, and stablecoin volumes across Sub-Saharan Africa grew 180% year-on-year as dollar access tightened across roughly 70% of African nations. The region recorded $205 billion in total on-chain value, a figure that underscores the scale of existing crypto engagement. The UK product does not reach those markets directly, but it sets a template that regulators in Nigeria, Kenya, and South Africa are already observing as they build their own frameworks. Kenya passed its Virtual Asset Service Provider framework in late 2025, and South Africa's Financial Sector Conduct Authority is actively developing its own regulatory approach to crypto assets.

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The Regulatory Clock

Coinbase enters the UK market as its largest FCA-registered digital asset provider. Its UK entity, CB Payments Ltd, holds an Electronic Money Institution licence. That registration is sufficient for now, but the window is narrowing. The FCA's Consultation Paper CP25/40 proposes designating crypto lending, borrowing, and staking as regulated activities that require separate FCA authorisation. The FCA's cryptoasset application gateway is scheduled to open in September 2026, with the full regime taking effect on October 25, 2027. Coinbase will need to pursue that authorisation to continue offering the product once the new rules are in force. Keith Grose, Coinbase's UK CEO, said in February 2025, when the exchange received its FCA exchange registration, that the company's regulatory standing in the country was foundational to its expansion plans, calling the FCA registration "critical to cement our strong position in the UK."

Measured from April 2026 to the October 2027 regime commencement, Coinbase has approximately 18 months to secure full authorisation. That figure reflects the writer's own arithmetic from those two dates rather than a regulatory filing. The effective window is tighter than it first appears: the FCA application gateway does not open until September 2026, meaning the formal authorisation process cannot begin for another five months, which compresses the available runway for review and approval considerably.