Coinbase Launches USDC Lending with Morpho and Up to 10% APY

When users deposit USDC, the funds are made available to borrowers, including those already using Coinbase’s crypto-backed loans. Customers can earn returns from interest paid by borrowers worldwide. There are no lockups, withdrawals are instant, and interest adds up automatically. This allows customer balances to grow over time. Coinbase stated that users can earn yields of up to 10.8% on USDC as of September 18, 2025, with standard APYs of 4.1% and 4.5% for Coinbase One members. The roll out for this feature is currently in the U.S. (excluding New York), Bermuda, and other countries.

Coinbase is pairing its new USDC lending feature with its bitcoin-backed loan service, where $900 million in loans have already been issued. Launched at the start of the year, the bitcoin-backed loan service is also powered by Morpho. The service allows users to borrow up to $100,000 in USDC against their bitcoin holdings. It offers flexible repayment, dynamic interest rates, and requires no bitcoin sales, though loans can be liquidated if collateral value falls.

The announcement mentioned that the latest setup combines Coinbase’s fintech-style interface and Morpho’s open infrastructure, an example of the ‘DeFi mullet.’ The idea is that users interact with a familiar app while the underlying activity runs on open smart contracts. Coinbase has effectively built an onchain system that covers both sides of the market with the help of both features, USDC lending and bitcoin-backed loans.