Coinbase just rolled out a major feature for its users in the United Kingdom, allowing them to borrow USDC against their cryptocurrency holdings. The pitch is relatively straightforward. Instead of selling off Bitcoin or Ethereum to free up cash and losing out on potential future gains, users can put up those assets as collateral and get a USDC loan approved in under a minute. From there, they can send the funds globally for free or convert them straight to fiat. This offers crucial flexibility for long-term investors looking to handle everyday expenses without liquidating their portfolios.
The entire system runs on Morpho, an onchain lending protocol built on Base, Coinbase’s proprietary blockchain network. Because the setup is entirely automated, the process is incredibly fast, and interest rates shift dynamically in real time based on current market conditions. Borrowers can track their loan health directly within the app, which currently supports BTC, ETH, and cbETH as collateral. Naturally, borrowing against volatile assets carries the inherent risk of liquidation if the collateral’s value takes a dive, meaning users have to actively monitor their margins. Following a massively successful rollout in the United States that processed billions in loan activity, Coinbase is aggressively pushing to become a comprehensive financial platform rather than just a trading app, with plans to expand this lending service to more countries and assets soon.
Circle Floats Reversible Transactions
While USDC finds new practical applications in retail lending, its issuer, Circle (NASDAQ: CRCL), is navigating a bit of a public relations minefield. Last week, Circle President Heath Tarbert raised eyebrows when he told the Financial Times that the company is actively exploring the possibility of making transactions reversible. The goal would be to combat fraud and settle disputes between parties, but Tarbert openly acknowledged the obvious tension this creates. Blockchain users expect settlement finality, and trying to balance the instant, irrevocable transfer of digital assets with the ability to claw them back is an incredibly tricky tightrope to walk.
The technical groundwork for this concept seems to be tied to Arc, Circle’s upcoming open Layer-1 blockchain designed as an enterprise foundation for stablecoin payments and capital market applications. Circle clarified that payments wouldn’t actually be unwound directly on Arc. Instead, an additional smart contract layer could process “counter-payments”—essentially functioning like a credit card refund—provided both parties agree to the reversal.
Unsurprisingly, crypto purists hated the idea. Many slammed the company, suggesting it was offensive for Circle to even use the word “blockchain” while pushing for mechanisms that heavily mimic traditional banking. Critics also pointed out the irony of Circle pushing for transaction control when it historically lags behind Tether in seizing illicit funds. While trying to shed its reputation as a haven for money laundering, Tether has actually frozen around 1.5 billion USDT tied to crime and terrorism. That is roughly 15 times the amount Circle has locked up, despite Tether’s market cap being less than two and a half times the size of USDC’s.
Circle CEO Jeremy Allaire didn’t take the criticism quietly. He fired off a heated response on X, accusing journalists of failing to do basic remedial research. Allaire pointed out that Circle had already been publicly researching how to enable refunds for quite some time, specifically citing the announcement of their Refund Protocol smart contract back in April. Whether or not Circle heavily utilizes this top-down control, the sheer capability to do so has many questioning if the reversibility scheme is just a ploy to win over traditional finance institutions before competitors beat them to it.
Tether Prepares to Invade the US Market
While Circle defends its architectural shifts, its biggest rival is actively preparing to muscle into American territory. Tether is continuing to ramp up the hype for USAT, its upcoming US-regulated stablecoin. Though an official launch date remains under wraps, the project’s social media team recently dropped an AI-generated promo video highlighting the friction and high costs of traditional cross-border payments compared to USAT, boldly branding it as “the people’s dollar.”
More concrete details are expected to surface this Thursday, October 2, at the Token2049 conference in Singapore. A major main-stage panel titled “USAT – Tether in America” will feature Tether CEO Paolo Ardoino, USAT CEO and former White House crypto aide Bo Hines, and Tether’s Head of Government Affairs Jesse Spiro.
They won’t be alone on stage. Nathan McCauley, CEO of digital asset custodian Anchorage Digital, will join them to explain his firm’s crucial role in the upcoming launch. Thanks to its federal banking charter, Anchorage is stepping in as the legal issuer of USAT. Technically speaking, Tether’s Hadron tokenization platform will handle the actual token minting, while Anchorage takes on the heavy lifting of compliance, legal oversight, and business development.
McCauley recently told Bloomberg that this partnership had been brewing since last year, heavily spurred by Congress getting serious about stablecoin legislation. Following the passage of the GENIUS Act, which was signed into law by President Trump this summer, Washington lawmakers made it clear that regulating Tether was a primary focus. Anticipating this regulatory shift, Anchorage launched a turnkey stablecoin platform. They currently have a dedicated team of about 20 people working on it, with plans to more than double that headcount over the next year. Rounding out the Token2049 panel will be Brandon Lutnick, son of current US Commerce Secretary Howard Lutnick, adding a significant layer of political weight to Tether’s ambitious American rollout.
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