Ethereum News Today: Coinbase's ETH Loans Let Users Borrow Without Selling Amid $1T Market Drop

Coinbase has launched Ether (ETH)-backed loans for U.S. customers, enabling users to borrow USDC stablecoins without selling their ETH holdings, according to multiple reports. The service, powered by the Morpho decentralized finance (DeFi) lending protocol and running on Coinbase's Base blockchain, is available in most U.S. states, excluding New York. Users can borrow up to $1 million in USDC against ETH and up to $5 million against Bitcoin (BTC), with variable interest rates and no fixed repayment schedules, according to Dune Analytics data and according to Coinbase's official announcement.

The new offering expands Coinbase's on-chain lending product, which has already processed over $1.25 billion in loan originations backed by $1.37 billion in collateral, according to Dune Analytics data. More than 13,500 wallets hold active borrow positions, with $810 million in outstanding loans. The product aims to provide liquidity to long-term crypto holders without forcing them to sell assets, a feature Coinbase's senior product director, Ben Shen, described as critical for users needing funds for expenses like down payments or debt refinancing.

The timing of the launch aligns with heightened market volatility. Ethereum trades below $3,000, while Bitcoin struggles below $87,000, with over $1 trillion in crypto market value lost in six weeks due to tech-sector weakness and U.S. rate policy uncertainty. Meanwhile, crypto funds reported $2 billion in outflows last week, with Bitcoin and Ethereum ETFs seeing combined outflows of $2.07 billion, per CoinShares. Despite the downturn, Ethereum has shown relative resilience compared to Bitcoin, with analysts citing "smart money" liquidity zones as potential support for recovery.

Coinbase's expansion into ETH-backed loans follows regulatory developments, including the GENIUS Act, which clarified stablecoin rules in July 2025. The company has also acquired Echo and launched a regulated initial coin offering (ICO) platform for U.S. retail investors, according to company announcements. Additionally, Coinbase partnered with Citigroup to streamline crypto-to-traditional currency transfers and introduced staking services for New York residents.

The ETH-backed loans utilize wrapped ETH (WETH) as collateral, with plans to support staked ETH (cbETH) in the future. Loans are subject to a 75% loan-to-value (LTV) ratio, with liquidation triggered at 86%-the same threshold as BTC-backed loans. Interest rates are determined dynamically by supply and demand on Morpho. The service is currently restricted to verified U.S. users (excluding New York) but is expected to expand internationally.

Coinbase CEO Brian Armstrong has emphasized the growth of on-chain credit markets, stating that the "onchain economy is thriving" as DeFi platforms now account for over half of all crypto-backed loans. The company's strategy to blend centralized infrastructure with decentralized services-such as DEX aggregation and wrapped Bitcoin-highlights its broader vision to compete with traditional banking functions, according to market analysis.