Stablecoin issuer Circle is moving deeper into regulated crypto lending with a new Bitcoin-backed borrowing service designed for institutions. Through its Circle Mint platform, eligible customers can deposit Bitcoin, use Circle’s wrapped token cirBTC as collateral, and borrow USDC via supported onchain lending markets.

Circle says the rollout aligns with a broader infrastructure push around its Arc network, which is positioned as a layer-1 for stablecoin-based payments and financial services. The borrowing service—called Digital Asset-Backed Borrowing—adds a new way for Bitcoin holders to access USDC liquidity without handing custody of the underlying assets to the lending venues themselves.

Key takeaways

• Circle’s new service lets eligible Circle Mint customers use Bitcoin as collateral to borrow USDC on supported DeFi lending protocols.
• The borrowing workflow uses cirBTC as the collateral token, which Circle says is backed 1:1 by Bitcoin held in custody by Circle National Trust.
• Borrowing terms such as rates, collateral requirements, and liquidation thresholds are determined by the third-party lending market, not by Circle.
• Circle plans to start with Morpho and later add Aave and other protocols.
• New York clients are excluded from the offering.

How Circle’s Bitcoin-backed borrowing works

Circle’s announcement details a custody-aware structure aimed at institutional users. Under Digital Asset-Backed Borrowing, eligible Circle Mint customers can deposit Bitcoin and mint cirBTC, Circle’s wrapped Bitcoin token. That cirBTC is then supplied as collateral to supported third-party lending markets.

Circle states that borrowed USDC is credited directly into the customer’s Circle Mint balance. From there, the customer can use USDC as needed—while the collateral posting and liquidation mechanics are governed by the specific lending protocol used.

Importantly, Circle positions this as a model that keeps the customer’s collateral control in the foreground. The company says the collateral is supplied via a customer-controlled wallet to the third-party DeFi protocol rather than lent out directly by Circle. Circle also characterizes the arrangement as overcollateralized, meaning borrowers must post more value in collateral than the amount of USDC borrowed.

Circle also notes that parameters affecting the position—such as borrowing rates, required collateral, and liquidation thresholds—are set by the third-party lending market. That design shifts the day-to-day risk and mechanics to the underlying DeFi venue, while Circle focuses on eligibility, the wrapping process, and the institutional onramp.

Morpho first, with Aave and others planned

For the initial launch, Circle is supporting Morpho as the first lending protocol for cirBTC-collateralized borrowing. Circle indicated that it plans to expand support to Aave and additional lending markets over time.

Separately, Circle’s timing matters for users watching Arc’s ecosystem. The service rollout coincides with cirBTC going live on Arc. According to Circle, cirBTC was launched on Ethereum in June, and its network availability is now expanding.

Circle also confirmed that it intends to connect these institutional borrowing flows to the broader Arc environment—an approach that could reduce friction for participants that prefer to use USDC as a settlement and payments asset within a single chain ecosystem.

Why the structure matters for institutions

Circle’s model reflects a recurring institutional demand in crypto: access to borrowing and leverage-like liquidity strategies without disrupting existing custody arrangements. By using cirBTC—backed 1:1 by Bitcoin held in custody by Circle National Trust—Circle provides a path to onchain credit while keeping a clear chain of custody and token backing on the issuer side.

This stands in contrast to some earlier institutional designs aimed at preserving underlying Bitcoin custody without wrapping. In a previous approach described earlier in the market, Lombard partnered with Bitwise to develop a system for borrowing against BTC held in custody, with Morpho supplying lending infrastructure. That model, as described in coverage at the time, was designed to avoid converting the underlying Bitcoin into a separate wrapped asset—opting instead to keep the Bitcoin in custody without using wrapping or bridging.

Circle’s decision to introduce cirBTC instead indicates a different tradeoff: the wrapped token enables easier integration with existing lending markets that support ERC-asset collateral, while Circle can still point to a specific backing mechanism for cirBTC.

More broadly, the development fits a pattern of institutional-oriented lending platforms emphasizing “qualified custody” and controlled collateral rather than open-ended asset movement. Earlier, Anchorage Digital partnered with Kamino to enable institutions to borrow against staked Solana held at Anchorage Digital Bank, avoiding a direct requirement to move collateral out of qualified custody. And BitGo expanded its institutional lending efforts with a portfolio-based framework, enabling multiple assets to serve as collateral depending on the structure of the financing.

In that context, Circle’s offering is best understood as an additional layer to the institutional lending stack—one that combines an issuer-backed collateral token, an institutional balance interface through Circle Mint, and DeFi lending mechanics executed on third-party protocols.

Arc mainnet timing and the USDC-centered roadmap

The borrowing service arrives just days after Circle rolled out the Arc mainnet, a layer-1 network designed around stablecoin payments and financial market use cases. Circle’s Arc positioning includes USDC as the native gas token, and support for tokenized assets such as BlackRock’s BUIDL and Circle’s USYC, according to earlier coverage.

That sequencing matters because it suggests Circle is aligning two different parts of its business: the transport layer (Arc) and the financial layer (stablecoin issuance, tokenization, and now institutional borrowing). For investors and builders, it also raises practical questions about where collateral and liquidity will concentrate—whether users will continue to rely primarily on Ethereum for DeFi borrowing, or whether Arc’s stablecoin-native design will draw activity from the start.

At the same time, the biggest determinants of user experience and risk remain anchored in the third-party lending markets that set borrowing rates and liquidation parameters. That means the real impact for end users may vary quickly depending on how Morpho (and later Aave and others) structure collateral factors and liquidation thresholds for cirBTC.

What to watch next

Circle’s next milestones—adding Aave and expanding the lending venue lineup, as well as observing how cirBTC usage develops across Arc versus Ethereum—will reveal whether this is merely an incremental product launch or a step toward a more standardized, issuer-coordinated institutional borrowing workflow. For now, institutional participants should pay close attention to protocol-specific borrowing terms, liquidation behavior, and eligibility constraints, including the exclusion of New York clients.

It’s been a busy weekend for one black hat who stole hundreds of millions of tokens from Fetch.ai, NuNet and SingularityNET, netting around $2.25 million of realized profits.

According to a report from Bitquery, however, the nominal value of the tokens minted was several times higher at the time of the theft. Indeed, blockchain security auditor Peckshield, which flagged the third incident, put the attacker’s unrealized profits at almost $17 million.

Read more: Osmosis took 74 days to discover 40-BTC Nomic exploit

Two of the three projects, all of which are part of the “Artificial Superintelligence Alliance” ecosystem, were hit almost simultaneously.

Advertisement

The hacker first drained 8.7 million FET tokens from Fetch.ai’s bridge and minted 400 million of NuNet’s NTX token.

The SingularityNET bridge was exploited hours later, with 900 million of its own AGIX token, and 500 million each of World Mobile Chain’s WMTx and Cogito’s CGV minted out of thin air.

The sale of Fetch.ai’s FET tokens for 523 ETH (approximately $1.2 million) generated the lion’s share of the attacker’s gains, with subsequent sales returning just 183 ETH ($420,000) between the four remaining tokens.

The half billion CGV tokens returned just $30 due to extremely thin liquidity.

Advertisement

With considerable portions of their supply made up of freshly minted counterfeit tokens, the prices of minted assets have collapsed.

Conversely, the sale of the (genuine) FET tokens resulted in a 5% drop.

Bitquery also highlighted a preliminary sweep of ETH and BNB from 16 wallets, four of which it had previously labelled as “SingularityNET or NuNet staff wallets,” indicating widespread penetration of the interconnected companies’ infrastructure.

In addition, $289,575 in USDC was later drained from a payroll contract.

The report warns that the majority of the signing keys have not been changed.

Advertisement

Got a tip? Send us an email securely via Protos Leaks. For more informed news and investigations, follow us on X, Bluesky, and Google News, or subscribe to our YouTube channel.

The crypto industry spent much of the past two years preparing for regulatory clarity in Washington. This week, one of its biggest legislative priorities hit a major roadblock.

The CLARITY Act failed to advance in the Senate on Tuesday, falling short of the 60 votes needed to bring the bill to the floor for debate. The setback significantly narrows the bill’s path this year, with the Senate calendar tightening ahead of the Nov. 3 midterm elections.

Strategists say crypto exchanges such as Coinbase may have more at stake than most from the stalled legislation.

Elsewhere, Standard Chartered is betting big on Arbitrum, Bitmine is turning its Ether treasury into a source of staking revenue, and Phemex’s CEO says AI has been a “net negative” for crypto.

Coinbase faces greater CLARITY Act fallout, Saxo strategist says

Saxo Bank strategist Ruben Dalfovo said Coinbase has more at stake in the CLARITY Act setback because its trading business is directly exposed to US market-structure rules.

In a Wednesday note following the bill’s failed procedural vote, Dalfovo said Coinbase is particularly exposed because new rules could determine registration requirements, tradable assets and who can participate on its platform. The setback could also affect other crypto-linked companies, though Dalfovo said their businesses are less directly tied to market-structure rules. Circle’s exposure is tied more closely to USDC adoption and reserve interest, while Strategy relies primarily on its Bitcoin holdings and access to financing.

The market reaction reflected those concerns. Coinbase, Circle and Strategy shares fell between 5% and 10% after the vote and continued lower the following day.

Standard Chartered sees Arbitrum hitting $10 as Wall Street moves onchain

Standard Chartered sees Arbitrum outperforming Bitcoin and Ether through 2030, driven by traditional finance firms moving assets onchain and transforming the network’s economics.

Geoff Kendrick, Standard Chartered’s global head of digital assets research, said Arbitrum receives 10% of net protocol revenue from companies building on it. Robinhood Chain, launched in July, has materially changed Arbitrum’s economics, with September revenue expected at $5 million, over five times the prior level. Kendrick projects ARB at $10 by 2030, a 70-fold increase from current prices around $0.14, which have gained 86% in the past month.

Standard Chartered’s thesis relies on tokenized assets reaching $39 billion and forecasts of $4 trillion by 2028. Arbitrum’s layer-2 infrastructure and revenue-sharing model position it as a beneficiary, but adoption pace remains uncertain.

Bitmine eyes $334 million in annual staking revenue from Ether treasury

Bitmine projects $334 million in annual staking revenue from its $15.8 billion crypto treasury, with over 5 million Ether now staked to generate recurring income even during volatile conditions.

Bitmine added 27,180 ETH last week, bringing its holdings to 5.95 million ETH worth $15.4 billion, representing roughly 4.9% of Ether’s circulating supply. More than 5.06 million ETH is now staked, generating an estimated $334 million in annualized revenue at current rates. Grayscale Ethereum Staking ETF stakes 84.6% of its Ether, according to its webpage.

Unlike Bitcoin treasury companies, Bitmine can earn recurring income from its crypto holdings through staking. Its stock has gained nearly 38% over the past month but remains down year to date, according to Yahoo Finance. Strategy, meanwhile, went a second straight week without buying Bitcoin, instead spending $139.3 million to repurchase preferred stock.

AI is draining crypto liquidity and empowering attackers, Phemex CEO says

Phemex CEO Federico Variola said AI has been a “net negative” for crypto, diverting liquidity from the industry while empowering attackers who exploit protocols.

Speaking on Cointelegraph’s Chain Reaction, Variola said AI has “empowered a lot of bad actors” and driven up cybersecurity costs for smaller teams. In July, attackers drained roughly $116 million in Bitcoin from more than 5,200 addresses tied to a Coldcard hardware wallet flaw widely believed to have been found through malicious AI use. Coinkite CEO Rodolfo Novak warned that AI-assisted code review now outpaces seasoned experts.

Variola warned AI threats could make self-custody and DeFi less appealing to retail users, pushing the industry toward greater centralization. He sees practical benefits in AI agents for portfolio building and trading decisions, but said they will not fully replace human judgment. CertiK’s Natalie Newson, however, noted AI can also be “one of the biggest defenses.”

Crypto Biz is your weekly pulse on the business behind blockchain and crypto, delivered directly to your inbox every Thursday.

Stablecoin issuer Circle has launched a Bitcoin-backed borrowing service for institutional clients, allowing eligible Circle Mint customers to use BTC as collateral to borrow USDC through onchain lending markets.

The service, called Digital Asset-Backed Borrowing, lets customers deposit Bitcoin, mint Circle’s wrapped Bitcoin token cirBTC and supply it as collateral to supported third-party lending markets on Arc or Ethereum. Morpho is the first lending protocol supported, with Circle planning to add Aave and other protocols. The rollout coincides with cirBTC going live on Arc on Monday.

According to Circle, borrowed USDC is deposited directly into the customer’s Circle Mint balance, while borrowing rates, collateral requirements and liquidation thresholds are set by the third-party lending market. The borrowing positions are overcollateralized, with collateral supplied through a customer-controlled wallet to third-party DeFi protocols rather than lent directly by Circle. New York clients are excluded.

Circle previously launched cirBTC on Ethereum in June. The token is backed 1:1 by Bitcoin held in custody by Circle National Trust.

Both launches come days after Circle rolled out the Arc mainnet, its layer-1 blockchain targeting stablecoin payments and financial markets. Arc uses USDC as its native gas token and supports tokenized assets including BlackRock’s BUIDL and Circle’s USYC.

Source: Circle

Institutional crypto lending expands

Circle’s launch follows a broader push to give institutional investors access to crypto-backed borrowing while keeping collateral within established custody arrangements.

In February, Anchorage Digital partnered with Kamino to allow institutions to borrow against staked Solana (SOL) held at Anchorage Digital Bank, giving borrowers access to onchain liquidity without moving the collateral out of qualified custody.

Bitcoin-backed models followed in March, when Lombard partnered with Bitwise to develop a system for borrowing against BTC held in custody, with Morpho providing the lending infrastructure. Unlike Circle’s model, which converts deposited BTC into cirBTC for use as collateral, Lombard’s system was designed to keep the underlying Bitcoin in custody without wrapping or bridging it.

BitGo also expanded its institutional lending offering in March, launching a financing platform for borrowing and lending against liquid, staked and locked crypto assets held in custody. Its portfolio-based model allows multiple assets to serve as collateral rather than requiring collateral to be posted for individual loans.

Magazine: Kyle Samani predicts SOL flippening, claims ‘no one’ uses ETH

Crypto market participants are watching two very different developments this week: a stalled bid for U.S. regulatory “market-structure” clarity, and new attempts to monetize crypto assets—ranging from layer-2 revenue projections to Ether staking and treasury strategies. While lawmakers failed to move the CLARITY Act forward in the Senate, strategists and companies continued to refine their assumptions about how regulation, onchain finance, and emerging AI risks could reshape incentives.

The legislative snag matters because it directly affects how U.S. crypto exchanges may register, which assets can be traded, and who can participate on platforms—issues that tend to influence both compliance costs and product roadmaps. Meanwhile, corporate and research teams offered fresh forecasts and operational updates, from Standard Chartered’s bullish view on Arbitrum’s economics to Bitmine’s staking revenue outlook and warnings from Phemex’s CEO about AI-driven security pressures.

Key takeaways

• The U.S. Senate failed to advance the CLARITY Act, falling short of the 60-vote threshold needed to bring it to the floor for debate.
• Saxo Bank strategist Ruben Dalfovo argued Coinbase faces more direct CLARITY Act exposure than many other crypto-linked businesses due to trading market-structure rules.
• Standard Chartered expects Arbitrum to outperform major tokens through 2030, citing revenue-sharing dynamics and expanding onchain activity by traditional finance.
• Bitmine projected $334 million in annualized staking revenue from its Ether holdings, with more than 5 million ETH reportedly staked.
• Phemex CEO Federico Variola said AI is weakening crypto liquidity while escalating the cybersecurity burden and enabling attackers.

CLARITY Act stalls—why the clock is now even tighter

According to the coverage of the vote, the CLARITY Act did not move forward in the U.S. Senate on Tuesday. The bill failed to secure the 60 votes required to proceed to a floor debate, a procedural outcome that narrows the path for legislative action this year. With the U.S. midterm elections scheduled for Nov. 3, the Senate calendar is described as tightening, which increases uncertainty around when (or whether) similar market-structure rules could be revisited.

That timing risk is especially relevant for firms with U.S.-facing trading operations. In a Wednesday note cited in the article, Saxo Bank strategist Ruben Dalfovo highlighted that Coinbase’s exposure is more immediate because new rules could affect registration requirements, the range of tradable assets, and platform participation criteria. In contrast, he characterized other companies as having exposure that is either more indirectly tied to market-structure rules or driven more by different economic variables.

Coinbase highlighted, but equity moves show broader concern

Dalfovo’s framing focused on how trading infrastructure is shaped by regulation. If the CLARITY Act had advanced, it could have clarified how exchanges must operate under U.S. market-structure expectations, potentially reducing compliance friction and enabling clearer product planning. With the bill sidelined, the uncertainty remains, and market pricing appears to have reacted accordingly.

Following the procedural failure, the article reports that shares of Coinbase, Circle, and Strategy declined by roughly 5% to 10%, with weakness continuing into the next day. For investors, that pattern suggests the market is not treating the legislative setback as a narrow corporate-event risk. Instead, it appears to be priced as a broader signal that regulatory clarity may be delayed, which can affect expectations for adoption, institutional participation, and near-term business development in the U.S.

What remains unclear is how long the delay will last and whether the next legislative attempt would prioritize the same market-structure provisions. Traders may also watch for alternative regulatory routes—such as agency guidance or enforcement actions—that could still influence exchange operations even without a new statute advancing.

Standard Chartered’s Arbitrum thesis: onchain finance could change revenue math

While regulation was a headline driver, research teams were also looking forward through the lens of onchain economics. Standard Chartered’s view, as reported, is that Arbitrum could outperform Bitcoin and Ether through 2030, supported by traditional finance firms moving assets onchain and changing how network economics are generated.

In the cited note, Geoff Kendrick—Standard Chartered’s global head of digital assets research—said Arbitrum receives 10% of net protocol revenue from companies building on it. The research points to new activity as a catalyst, especially the Robinhood Chain launch in July, which the report says has materially altered Arbitrum’s economics. The article further claims that September revenue is expected to reach $5 million, described as more than five times the prior level.

Based on that revenue-sharing framework and additional assumptions, Kendrick projected ARB at $10 by 2030. The article frames this as a major jump from levels around $0.14 at the time of reporting, noting that ARB had gained 86% over the preceding month.

Standard Chartered’s broader model also depends on tokenized assets reaching $39 billion and forecasts of $4 trillion by 2028. The key uncertainty for readers is whether those adoption targets arrive fast enough to translate into sustained protocol revenue. Layer-2 revenue can be sensitive to user activity, wallet and exchange integration, and the competitive landscape among scaling networks—so investors treating this as an investment thesis may want to monitor actual growth in net protocol revenue, not just token price performance.

Bitmine leans on staking: projected $334 million annualized from Ether treasury

On the corporate side, Bitmine’s approach centers on earning recurring income from its Ether treasury through staking. The article says Bitmine projects $334 million in annualized staking revenue based on its reported $15.8 billion crypto treasury and indicates that more than 5 million ETH is now staked to generate ongoing income even during volatile market conditions.

Bitmine reportedly added 27,180 ETH last week, bringing holdings to 5.95 million ETH valued at $15.4 billion. The article states that this represents roughly 4.9% of Ether’s circulating supply. It also claims that more than 5.06 million ETH is staked and uses current rates to estimate $334 million in annualized revenue.

The report also compares this strategy with Bitcoin-treasury-style approaches by emphasizing the staking component: unlike holdings that rely primarily on price appreciation, staking revenue provides a recurring cashflow-like mechanic (even though it remains exposed to network conditions and staking dynamics). It cites Grayscale’s Ethereum Staking ETF as having 84.6% of its ETH staked, according to the fund’s webpage.

Separately, the article notes that Strategy—contrasting with treasury staking economics—went a second straight week without buying Bitcoin, using $139.3 million to repurchase preferred stock. That side-by-side distinction matters for investors trying to interpret sector performance: in the same broader “treasury strategy” theme, different firms are effectively betting on different return drivers—token price versus staking yield.

AI’s double-edged impact: liquidity drain and higher cyber risk

The operational risk theme arrived in another segment of the reporting, where Phemex CEO Federico Variola argued that AI has been a “net negative” for crypto. In his comments, he said AI is diverting liquidity away from the industry while also enabling attackers, raising cybersecurity costs—particularly for smaller teams without the resources to respond quickly.

The article ties this warning to an example from July: attackers allegedly drained roughly $116 million in Bitcoin from more than 5,200 addresses associated with a Coldcard hardware wallet flaw. The coverage suggests the flaw was widely believed to have been identified through malicious AI use. It also references Coinkite CEO Rodolfo Novak, who warned that AI-assisted code review can outpace experienced experts.

Variola’s broader takeaway is that AI threats could make self-custody and DeFi less attractive for retail users, potentially pushing the ecosystem toward greater centralization. He said AI agents could still offer practical value for portfolio building and trading decision-making, but he argued they would not fully replace human judgment. The article also includes a counterpoint from CertiK’s Natalie Newson, who said AI can be “one of the biggest defenses.”

For readers, the near-term question is not whether AI will impact crypto security, but how quickly defenses and operational practices will adapt. Expect ongoing focus on secure development processes, faster incident response, and whether security tooling keeps pace with attacker tooling—especially as attackers increasingly automate discovery and exploitation.

Going forward, the most important watch items are whether future legislative attempts revive parts of the CLARITY Act framework before the midterms, and whether onchain and corporate revenue strategies—like L2 revenue sharing and Ether staking—can prove resilient despite regulatory uncertainty and rising AI-linked security threats.

Bitcoin (BTC) spiked above $86,000 after Monday’s Wall Street open as US stocks rose amid cooling oil prices.

Key points:

• Bitcoin gained nearly 6% on Monday to briefly trade above $86,000 for the first time since late January.
• Crypto short liquidations totaled almost $800 million in 24 hours as analysis called the start of a “new bull market.”
• US stocks opened the week higher as WTI oil prices dipped below $92 per barrel.

Bitcoin, US stocks head higher as oil drops further

TradingView data showed Bitcoin hitting a new 33-week high of $86,332 on Bitstamp, up 5.7% on the day at the time of writing.

Upside quickly returned after Sunday’s weekly close, which, at $81,120, was Bitcoin’s highest since the start of May, as oil prices continued a drop from late last week.

Signals from both Qatar’s Foreign Ministry and US President Donald Trump that diplomatic negotiations to end the US-Iran war could resume helped send WTI crude oil as low as $91.59 per barrel on Monday.

“Middle East oil flows remain surprisingly strong despite the disruption to Saudi Arabia’s ‌East-West pipeline,” JPMorgan analysts said in a note on Friday, quoted by CNBC and others.

A report by The New York Times additionally claimed that the US planned to extend its trade deal with China by six months ahead of Chinese President Xi Jinping’s visit on Sept. 23-25.

The S&P 500 and tech-heavy Nasdaq Composite Index were up 1% and 1.6%, respectively, at the time of writing.

Crypto short liquidations near $800 million in 24 hours

Bitcoin’s gains, meanwhile, led to increasingly optimistic commentary on longer-term price strength. 

Related: Strategy buys 950 Bitcoin for $76M, repurchases $174M in STRC

In its latest analysis on X, trading resource The Kobeissi Letter described crypto as being “in a new bull market.” Kobeissi referenced 50% gains for BTC/USD over just two months as crypto short liquidations neared $800 million over 24 hours. 

Commenting on Bitcoin’s short-term prospects, Bitfinex Alpha, the research arm of crypto exchange Bitfinex, flagged buyer support, rising open interest and fresh capital inflows to US spot Bitcoin exchange-traded funds (ETFs) as three key requirements for further price upside.

“For a breakout to be validated, we would want to see net taker buying rather than the profit-taking that capped the advances on 18 and 19 September,” it noted in a Monday blog post, adding: 

“Coin-denominated open interest would also need to expand, indicating fresh positioning rather than a move driven primarily by short covering. Conversely, a daily close beneath $77,100 invalidates the structure to the downside, exposing the True Market Mean at $76,677.”

Exchange BTC open interest data (screenshot). Source: CoinGlass

Crypto trader and analyst Rekt Capital, meanwhile, confirmed that BTC/USD had broken out of a cycle of lower highs in place since October 2025, and with it its prior macro downtrend. In his latest X analysis, he identified a new target trading range between $86,681 and $93,659.

“If Bitcoin is ready to confirm a breakout from the $60k-$80k Range, its next milestone would be to try to enter the blue-blue Range,” he wrote in commentary on a chart highlighting the range, which figured prominently at the end of 2025.

BTC/USD one-week chart. Source: Rekt Capital on X.com