Arc sees $90M in USDC borrowed against cirBTC in early DeFi activity

Circle’s Arc blockchain just turned three days old, and institutional borrowers have already pulled more than $90 million in USDC against deposits of cirBTC, the chain’s wrapped Bitcoin token.

The figure represents a dramatic acceleration from the chain’s earliest hours. Borrowing volumes started at roughly $1.37 million shortly after cirBTC went live on September 21, then climbed to $14.3 million within days.

How the plumbing works

Arc is Circle’s EVM-compatible Layer 1, purpose-built for what the company calls stablecoin-native finance. The mainnet launched around mid-September 2026, and cirBTC followed on September 21 as the chain’s first major financial primitive.

The token is backed 1:1 by Bitcoin held at Circle National Trust, with reserves verifiable on-chain through Chainlink Proof of Reserve.

The borrowing process works through what Circle calls Digital Asset-Backed Borrowing, or DABB. Eligible Circle Mint clients deposit BTC, mint cirBTC against it, supply that cirBTC to a lending market on Morpho Blue, and then borrow USDC that settles directly to their Mint balance.

Loan-to-value ratios are set by the lending protocol itself, not by Circle. One example market showed an 86% LTV.

One notable restriction: clients based in New York are excluded from DABB.

Who’s providing the liquidity

Two names keep appearing on the supply side of these markets: Galaxy and Keyrock. Both firms have been acting as primary liquidity providers to the cirBTC/USDC lending pools on Morpho Blue, which helps explain why borrowing capacity scaled so quickly.

On launch day itself, deposits of USDC and EURC reportedly exceeded $150 million, suggesting the supply side was well-seeded before borrowers even showed up.

Why institutions want this

The core value proposition is straightforward: borrow dollars without selling your Bitcoin. For institutions with large BTC positions, this solves a real problem. Selling Bitcoin to raise working capital triggers taxable events and forces them to give up upside exposure. Borrowing against it does neither.

The rapid scaling from $1.37 million to $90 million in roughly three days suggests pent-up demand among institutions that wanted Bitcoin-backed borrowing but couldn’t stomach the counterparty risk of existing DeFi options.

Whether the $90 million figure holds up under scrutiny is worth watching. Early reporting on Arc’s launch showed some discrepancies between published snapshots and actual on-chain volumes, with some figures reflecting lower borrowing activity than headline numbers suggested. The gap between deposits ($150 million-plus) and borrowing ($90 million) also indicates that a meaningful chunk of supplied capital hasn’t been matched with borrowers yet.