TL;DR
- Coinbase lets eligible customers borrow up to $1 million in USDC using cbETH collateral, without unstaking, in the U.S. excluding New York today.
- Loans run through Morpho with variable rates; proceeds hit accounts on approval, while collateral moves onchain, and borrowers must stay under 86% LTV.
- Armstrong pulled support for the Clarity Act, delaying Senate action; stablecoins made $355 million in Q3 2025, and Hammond put passage odds at 40%.
Coinbase has rolled out a borrowing feature that lets customers tap liquidity without unwinding staking positions, using tokenized staked ether (cbETH) as collateral. The product positions cbETH as working capital, not just a passive yield wrapper. Eligible users can borrow up to $1 million in USDC, with limits tied to posted collateral and loan-to-value requirements. Coinbase says the service is available in the United States, excluding New York, with limited access in the United Kingdom, as it leans on onchain rails to deliver near-instant credit while keeping staking rewards in place on its staking platform.
How cbETH-backed borrowing works and why it matters
Borrowers request USDC inside Coinbase, and once approved the funds are credited immediately to the user’s account, while the pledged cbETH is transferred onchain to a third-party protocol. Coinbase is effectively outsourcing the lending engine to Morpho while keeping the customer workflow inside its app. The loans are powered by Morpho smart contracts and carry variable interest rates. Morpho facilitates overcollateralized borrowing through smart contracts directly. Coinbase says borrowers must keep loan-to-value below 86% to avoid automatic liquidation and penalties, a threshold that could tighten quickly if Ether experiences extreme volatility compared with fiat markets.
By accepting cbETH as collateral, Coinbase extends staked ether beyond passive yield generation into a liquidity tool. The promise is that customers can keep earning staking rewards while funding large purchases, portfolio adjustments, or one-time expenses while avoiding security headaches. Coinbase notes that its staking footprint has expanded, including a late-2025 launch in New York after approval from the state Department of Financial Services. Staking is now available in 46 U.S. states, excluding California, New Jersey, Maryland, and Wisconsin, where retail programs are limited or blocked. Coinbase credited Governor Hochul for providing clarity and progress.
The product arrives as Coinbase faces rising regulatory friction in Washington over stablecoin yields and the delayed Clarity Act. Armstrong’s message is that market-structure rules should not enable regulatory capture that blocks competition. Armstrong withdrew support for the draft bill even as Andreessen Horowitz backed it, and the Senate Banking Committee delayed a vote. Robinhood CEO Vlad Tenev said staking is a top user request and called for consumer-protective legislation that still enables innovation. Coinbase said stablecoins were nearly 20% of revenue, or $355 million, in Q3 2025; Ron Hammond put passage odds at 40%.
