Coinbase has rolled out a powerful new lending feature that lets eligible U.S. users borrow up to $1 million in USDC by using staked ETH (cbETH) as collateral.
Key Takeaways
- Coinbase now offers crypto-backed loans up to $1 million using cbETH, allowing users to maintain ETH exposure and staking rewards.
- The system operates through Morpho smart contracts on the Base network, supporting instant USDC disbursement with flexible repayment.
- Loans require a maximum loan-to-value (LTV) of 75% at initiation and automatic liquidation at 86% LTV, posing risk in volatile markets.
- The feature is currently available across most U.S. states, excluding New York, with limited access in the UK.
What Happened?
Coinbase has introduced a lending feature that enables verified U.S. users to borrow up to $1 million in USDC using cbETH, a token representing staked Ethereum, as collateral. This move turns staking assets into productive tools while preserving ETH exposure and staking rewards. The system is powered by Morpho, an on-chain lending protocol that manages loans via smart contracts.
Staked your ETH, but need liquidity?
— Coinbase 🛡️ (@coinbase) January 22, 2026
No problem – now you can access up to $1M in liquidity against your cbETH, without unstaking or selling.
Available now in the U.S. (ex. NY). pic.twitter.com/WqqaOBUlrS
Coinbase Expands Liquidity Options with cbETH
This new product is designed to unlock liquidity for long-term ETH holders without forcing them to sell their assets. cbETH allows users to benefit from Ethereum’s price movements and staking yields, while tapping into immediate cash flow.
Users can deposit cbETH as collateral directly within Coinbase. These deposits are routed to Morpho smart contracts on the Base network. Upon approval, USDC is credited to the user’s account instantly and can be converted into dollars for spending or transfers.
Key loan details include:
- Borrowing limit: Up to $1 million
- Collateral type: cbETH
- Initial LTV cap: 75%
- Liquidation threshold: 86% LTV
- Interest rate: Variable, based on supply-demand dynamics on Morpho
- Repayment schedule: No fixed terms, repay anytime
Morpho acts as the backend lending engine, handling all overcollateralized borrowing, interest calculations, and liquidation triggers. The protocol also uses oracles to constantly monitor the real-time value of cbETH.
Why It Matters for Staked ETH Holders?
This rollout aligns with a broader trend: transforming staked crypto from passive yield tools into multifunctional financial instruments. Tokenized staking assets like cbETH are gaining ground across exchanges and DeFi protocols alike, as platforms race to offer liquidity options without disrupting core holdings.
Coinbase’s lending product is especially appealing because it allows borrowers to retain their staking rewards while still leveraging their assets for capital. It also simplifies the experience by keeping the user entirely within the Coinbase platform, even though the lending itself is powered by Morpho.
This move follows Coinbase’s previous BTC-backed loan product and is part of a broader push to offer regulated lending solutions integrated with staking.
Regulatory Landscape and Market Position
The product is currently available in most U.S. states, though it notably excludes New York due to regulatory restrictions. Coinbase has also rolled out staking in 46 states, with some exceptions like California and New Jersey. The firm praised Governor Hochul of New York for helping clarify local rules on staking products, though lending services are still off-limits in that state.
This launch comes amid increasing scrutiny of crypto lending and staking by U.S. lawmakers. Coinbase CEO Brian Armstrong recently withdrew support for the Clarity Act, a draft bill facing delays in the Senate. Meanwhile, Coinbase revealed that stablecoins generated $355 million in Q3 2025, or nearly 20% of its revenue, indicating the rising financial importance of these assets.
CoinLaw’s Takeaway
In my experience, the crypto industry has been yearning for tools like this that strike a balance between innovation and practicality. What Coinbase is doing here is smart: they’re giving ETH holders access to liquidity without asking them to give up the rewards of staking or trigger a taxable event. For anyone managing a large portfolio or eyeing major expenses, this is a game changer. Just be mindful of the LTV ratio. With crypto’s volatility, that 86% liquidation mark can sneak up fast.
