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Coinbase has added XRP, Dogecoin, Cardano, and Litecoin as eligible collateral on its crypto-backed lending service, letting qualifying U.S. users borrow up to $100,000 in USDC through the Morpho protocol on its Base network, without liquidating their holdings or triggering a taxable event.
The announcement, confirmed on February 18th, 2026, marks one of the platform’s most significant lending expansions since launching on-chain borrowing through decentralized finance infrastructure last year.
The feature enables users (excluding residents of New York State) to borrow up to $100,000 in USDC by pledging supported cryptocurrencies as collateral.
The program operates via the Morpho lending protocol on Coinbase’s Base network, blending centralized exchange access with decentralized liquidity markets.
Previously, only Bitcoin and Ethereum were supported collateral assets, with higher borrowing limits available for those two cryptocurrencies.
The expansion is widely viewed by analysts as an effort to increase capital efficiency for long-term crypto holders, a growing priority as investors seek liquidity options without triggering taxable sales or losing market exposure.
“Eligible users can now leverage additional tokens to access liquidity while maintaining ownership of their crypto.” Coinbase said in product documentation describing the lending feature.
Under the updated structure, borrowers deposit supported tokens like XRP, DOGE, ADA, or LTC as collateral, which is then moved on-chain to the Morpho protocol.
Once secured, USDC stablecoins are deposited into the user’s Coinbase account almost instantly.
Unlike traditional loans, the system does not rely on credit scores or fixed repayment schedules. Instead, risk is managed through collateralization ratios.
According to platform disclosures:
Jacob Frantz, a product manager at Coinbase, said the expansion is intended to help users extract utility from long-held assets.
“This move aims to allow users to utilize their crypto assets without selling them.” Jacob Frantz, Product Manager, Coinbase.
The company also clarified that borrowed funds cannot be used for trading directly on the exchange, a restriction designed to reduce speculative risk and regulatory concerns.
Market observers say the inclusion of XRP, Dogecoin, Cardano, and Litecoin represents a shift in how exchanges view altcoin liquidity and maturity.
Historically, crypto-backed lending products prioritized Bitcoin and Ethereum due to their market depth and relative stability.
Expanding collateral eligibility suggests growing institutional confidence in large-cap altcoins as financial instruments rather than speculative assets.
Industry analysts note that lending access can increase token utility, potentially strengthening long-term holding behavior.
A market report cited by CoinDesk noted that the change allows holders to access funds without selling, a feature increasingly attractive during volatile market cycles when investors prefer maintaining exposure to potential upside.
The implication is the gradual convergence between centralized exchanges and decentralized finance infrastructure.
By routing loans through Morpho, Coinbase effectively outsources liquidity provisioning to DeFi markets while maintaining a familiar user interface for retail investors.
Despite the benefits, crypto-backed lending carries significant risks, particularly during sharp market downturns.
Because loans are over-collateralized, sudden price drops can trigger automatic liquidations, forcing the sale of pledged assets.
Coinbase states borrowers must continuously maintain healthy collateral ratios to avoid penalties or liquidation events.
Regulatory scrutiny also remains a key factor shaping lending expansion in the United States.
Crypto lending faced widespread crackdowns following failures of several centralized lenders earlier in the decade.
The latest rollout may therefore represent a strategic compromise, combining DeFi infrastructure with regulated exchange access.
Analysts say the long-term significance lies less in the specific tokens added and more in the precedent established.
If adoption grows, more assets could become eligible collateral, turning crypto portfolios into multi-asset credit lines comparable to securities-backed lending in traditional finance.
