U.S. users of Coinbase crypto loans can now unlock more liquidity by borrowing against a wider range of popular assets without selling their holdings.
Summary
Coinbase adds four new assets as loan collateral
Coinbase has expanded its crypto-backed lending product to support XRP, Dogecoin, Cardano‘s ADA, and Litecoin as collateral, broadening access to on-chain credit. Moreover, the move targets users seeking liquidity while maintaining exposure to these established altcoins.
Eligible U.S. customers can borrow up to $100,000 in USDC using these four assets, but access excludes residents of New York. The new options sit alongside existing support for Bitcoin (BTC) and Ether (ETH), which offer significantly higher borrowing limits.
The loans are executed via Morpho, a decentralized lending protocol that operates on Base, Coinbase’s Ethereum layer-2 network. However, Coinbase only supplies the front-end interface, while the borrowing and repayment mechanics are handled fully on-chain through smart contracts.
Existing Bitcoin and Ether limits remain higher
Coinbase initially launched the lending product with Bitcoin support before later adding Ether. That said, BTC holders can still borrow up to $5 million in USDC, while ETH holders can access up to $1 million, far above the new altcoin caps.
According to Coinbase, the service has already processed more than $1.9 billion in total loan originations since launch. This volume underscores growing demand for crypto-backed loans among users who prefer to retain their spot positions instead of selling into fiat.
Coinbase reported holding $17.2 billion in XRP in customer accounts as of December 31, based on an SEC filing. Moreover, that figure makes XRP one of the largest assets on the platform, helping explain its early inclusion in the lending expansion.
Loan-to-value rules and liquidation thresholds
The newly added assets come with tighter risk parameters. XRP, Dogecoin, ADA, and Litecoin loans are capped at a maximum loan-to-value (LTV) ratio of 49%, which is notably more conservative than for BTC and ETH.
By comparison, Bitcoin and Ether loans allow up to 75% LTV. Moreover, liquidation thresholds differ sharply: XRP, Dogecoin, ADA, and Litecoin loans face liquidation at 62.5% LTV, while BTC and ETH loans are only liquidated when the ratio reaches 86%.
LTV measures the size of the loan versus the market value of the posted collateral. It rises when collateral prices fall or when interest accrues, and it drops when collateral appreciates or when the borrower repays part of the outstanding loan.
How the on-chain loans operate
There is no fixed repayment schedule for borrowers using Morpho on Base. However, customers must keep their LTV ratios within allowed ranges to avoid forced liquidation, which can occur rapidly in volatile markets.
Interest rates are variable and determined by supply and demand dynamics on the Morpho protocol’s liquidity pools. Coinbase also charges a one-time fee every time a user initiates a new borrowing event, including when they add to an existing loan position.
Under Coinbase’s terms of service, borrowers cannot use loan proceeds to trade directly on the Coinbase platform. That said, funds taken out in USDC can still be moved elsewhere in the wider crypto ecosystem, subject to user decisions and regulatory constraints.
Risk profile and tax considerations
The lending product is often described as tax-efficient because borrowing against crypto typically does not trigger capital gains in the same way that selling does. However, Coinbase stresses that actual outcomes depend heavily on each user’s specific tax situation and local regulation.
If collateral values fall sharply, loans can be liquidated. In such a scenario, a third party repays the outstanding debt and seizes the posted collateral at a discount. Moreover, this process can crystalize losses in volatile markets if users do not monitor LTV closely.
Some tokens must be wrapped to function as collateral on Ethereum-compatible networks like Base. Coinbase has warned that this conversion step may itself be treated as a taxable event, and it advises users to understand the implications before engaging.
Safeguards, alerts and future access
To mitigate risk, Coinbase says it applies a buffer when loans are issued and sends alerts as borrowers approach the liquidation threshold. However, users remain responsible for actively managing their positions, especially during periods of heightened volatility.
In the context of growing demand for coinbase crypto loans, the company plans to expand access to customers beyond the United States. Broader international availability is on the roadmap, though Coinbase has not provided a specific rollout date.
Jacob Frantz, product lead at Coinbase, summarized the strategy by saying: “No matter what you’re holding, you should be able to leverage your crypto without having to sell.” Overall, the expanded collateral set and on-chain mechanics position Coinbase as a major player in the market for institutional-style lending to retail users.
In summary, Coinbase’s integration with Morpho on Base, tighter risk controls for altcoins, and growing loan volumes highlight how centralized platforms and DeFi protocols are converging to deliver scalable, collateralized borrowing solutions.
