Circle has opened a BTC-backed USDC borrowing facility through Morpho's Arc platform, restricted to Circle Mint institutional clients. The cirBTC market has grown rapidly from $1.37 million to $14.3 million in USDC borrowings against 287 cirBTC in under a week, with Galaxy and Keyrock supplying the majority of USDC liquidity. Circle wraps the BTC into cirBTC and provides the wallet infrastructure; Morpho governs loan terms and liquidation logic.
This is a direct competitive development for Armada's crypto repo desk. Circle's Mint clients are institutional counterparties, the same segment Armada targets. The structure, BTC collateral posted against USDC borrowings with professional liquidity providers on the supply side, mirrors crypto repo economically. Armada's differentiators are Fireblocks-based custody with no rehypothecation and bilateral OTC documentation, versus Morpho's smart contract and liquidation risk. Armada should ensure this value proposition is clearly articulated to existing and prospective BTC-holding clients.