Coinbase Expands Loans to XRP, DOGE, ADA and LTC — Borrow USDC Without Selling

Coinbase widens its crypto-backed loan program to include XRP, Dogecoin, Cardano and Litecoin, giving holders of those tokens a new way to borrow fiat-like stablecoins without selling. What’s new - Coinbase announced on X that customers across the U.S. (New York excluded) can now post XRP, DOGE, ADA and LTC as collateral via the DeFi lending protocol Morpho and borrow up to $100,000 in Circle’s USDC. - The expansion follows earlier rollouts for Bitcoin and, more recently, Ethereum (the product began accepting ETH in November). Coinbase’s lending product is approaching $2 billion in originations, according to a Dune dashboard. Why it matters - The four newly supported tokens had a combined market capitalization of about $117 billion on Wednesday, per CoinGecko—less than half of Ethereum’s market value but still representing widely held retail assets. - For tokens that can’t be natively staked—XRP, Dogecoin and Litecoin—crypto-backed loans offer one of the few practical ways for holders to extract liquidity from appreciated positions without selling. How it works (and the risks) - When a user posts assets through Coinbase’s product, those assets are “wrapped” so they can be used on Ethereum-based DeFi rails such as Morpho. - Borrowers can draw USDC against wrapped collateral; loans are subject to liquidation if collateral value falls too much relative to outstanding borrowings. On Morpho, loans flagged as unhealthy can be repaid by third parties, who then claim the collateral—often at a discount. - Tax implications are complex: borrowing against crypto can, in theory, avoid immediate capital gains events, but liquidations and the act of wrapping tokens for DeFi use can trigger taxable events in the U.S., according to law firm Greenspoon Marder LLP and standard IRS treatment of taxable swaps. Coinbase explicitly warns users about liquidation risk and says it does not provide tax advice. Coinbase’s position and safeguards - The expansion could be strategically important: a recent SEC filing shows Coinbase held $17.2 billion in XRP on its platform as of Dec. 31. - Coinbase says it enforces an extra buffer when loans are originated to reduce liquidation risk and notifies borrowers as thresholds are approached—at intervals up to every 30 minutes. The exchange is also exploring additional protections after a volatile stretch in early February when liquidations surged: about $170 million of crypto-backed loans were liquidated across a seven-day period, Decrypt reported. Bottom line Coinbase is leaning into DeFi rails to broaden access to liquidity for users holding popular retail tokens. The move opens a new channel to tap value from XRP, Dogecoin, Cardano and Litecoin without outright sales, but borrowers should weigh the benefits against liquidation, wrapping and tax risks before taking a loan. Read more AI-generated news on: undefined/news