Coinbase has rolled out a fixed-rate, Bitcoin-collateralised USDC loan product that obliges borrowers to repay the full balance by a predetermined date, after which a liquidator can claim the collateral even if the loan-to-value ratio remains safe.
Structure of the fixed-rate product
The offering, announced on 22 September 2026, uses Morpho Midnight as the underlying protocol. Unlike Coinbase’s variable-rate loans, which have no explicit deadline, the fixed-rate option locks in both the interest rate and a repayment schedule at the moment the borrower confirms the loan. The rate displayed before confirmation is only indicative; the final rate is set at confirmation. Borrowers receive reminders seven days, three days, and 24 hours before the maturity date. Paying back the loan early does not reduce the accrued interest, making the total cost predictable.
Liquidation mechanics after maturity
Morpho’s rules introduce a separate liquidation trigger that activates once the maturity deadline passes with any outstanding debt. At the exact moment of maturity, a healthy loan is not automatically liquidated, but the moment the deadline is breached, any liquidator can repay the remaining balance and claim the Bitcoin collateral, irrespective of the loan-to-value health. This post-maturity trigger co-exists with the standard health-based liquidation that can occur earlier if the collateral value falls or the debt rises enough to breach the LTV threshold. Consequently, borrowers face two distinct risks: a health-based liquidation before maturity and a deadline-based liquidation after maturity.
Operational details and limits
The product is currently available to verified U.S. customers outside New York, with limited access in the United Kingdom. Bitcoin is the sole collateral type for the fixed-rate launch, though Coinbase notes that collateral options may differ for variable-rate loans. Loan amounts, rates, and borrowing limits vary per loan and are displayed in the product interface. Borrowers cannot switch an existing loan between fixed and variable rates, so the maturity date and total repayment amount are fixed once the loan is taken. Coinbase reports that its Bitcoin-backed lending portfolio already exceeds $1 billion and aims to reach $100 billion in five years.
Why it matters
The dual-trigger liquidation framework adds a layer of risk that is independent of market volatility. Even borrowers who maintain a comfortable collateral buffer can lose their Bitcoin if they miss the repayment deadline. This design could influence borrower behaviour, encouraging earlier repayment or more conservative borrowing, and may shape how other platforms structure fixed-rate crypto credit products.
