On Wednesday, Coinbase added XRP, Cardano (ADA), Dogecoin (DOGE) and Litecoin (LTC) as loan collateral. U.S. customers can borrow up to $100,000 in USDC through Morpho; New York residents are excluded for regulatory reasons.
Users deposit supported crypto into a vault and draw USDC based on loan-to-value ratios. Morpho handles the on-chain side and keeps collateralization ratios verifiable at any time.
USDC borrowing has approached $2 billion in originations, per a Dune dashboard. The four tokens had a combined market cap near $117 billion, per CoinGecko.
Coinbase reported holding about $17.2 billion in XRP on its platform as of December 31, per an SEC filing.
Loans carry liquidation risk when collateral falls too far, allowing third parties to repay and claim discounted collateral. “[Coinbase] enforces an additional buffer when users take out a loan to reduce liquidation risk.”
Borrowers are notified when they reach the limit, sometimes as often as every 30 minutes. Law firm Greenspoon Marder LLP noted wrapping assets before posting is treated as a taxable event in the U.S., and liquidations can create further tax obligations.
For Dogecoin and Litecoin holders, the loan product offers a way to access liquidity without selling tokens. Unlike Ethereum or Cardano, these assets lack native staking, so borrowing can be one of few productive uses.
