Major U.S. crypto exchange Coinbase has expanded its on-chain crypto-backed lending product to allow holders of XRP and Dogecoin (DOGE) — along with Cardano (ADA) and Litecoin (LTC) — to borrow stablecoins without selling their digital assets.
The move significantly broadens the list of eligible collateral for Coinbase’s lending program, which operates through the Morpho decentralized lending protocol on Coinbase’s Base layer-2 network. Gatsby Users now can access up to $100,000 in Circle’s USDC stablecoin by posting supported crypto as collateral, the company said in an announcement on X.
How the Expanded Lending Works
Under the updated offering:
Verified U.S. customers — excluding residents of New York State — can pledge XRP, DOGE, ADA, or LTC as collateral.
Borrowers receive USDC stablecoin without needing to sell their crypto holdings.
The loans are executed on-chain via smart contracts on Morpho, while Coinbase provides the user interface.
There is no fixed repayment schedule as long as borrowers maintain required loan-to-value (LTV) ratios above liquidation thresholds.
While Bitcoin (BTC) and Ethereum (ETH) loan limits remain substantially higher — up to $5 million USDC against BTC and $1 million USDC against ETH — the newly added altcoins are capped at $100,000 USDC due to their historically higher volatility.
Liquidity Without Selling
Coinbase has positioned the product as a way for holders of widely owned digital assets to unlock liquidity without triggering capital gains events by selling, potentially preserving long-term exposure while meeting short-term financial needs.
The expansion comes as the lending service approaches nearly $2 billion in total originations, underscoring growing demand for credit products built on decentralized lending rails.
Risk and Tax Considerations
While borrowing against crypto can be an efficient way to access liquidity, it also carries liquidation risk — if the value of collateral falls too far relative to the borrowed amount, positions can be liquidated on Morpho’s protocol to cover debt.
Additionally, some assets — like XRP, DOGE or LTC — must be wrapped to function on Ethereum-compatible networks like Base. That conversion process can itself be treated as a taxable event in the U.S., depending on individual tax law interpretations.
Coinbase warned users that the product faces variable interest rates and does not provide tax or investment advice, and urged borrowers to monitor collateral positions closely, especially in volatile markets.
