Coinbase’s fixed-rate Bitcoin loans can put healthy collateral at risk after maturity

Coinbase's new fixed-rate Bitcoin-backed USDC loans give borrowers a set repayment date, but the deadline creates a liquidation risk separate from a falling Bitcoin price. If the debt remains unpaid after maturity, a healthy collateral position can still be liquidated. Morpho announced the offer on September 22, 2026, with the rate and repayment date fixed from the outset.

The loans use Morpho Midnight, the fixed-rate lending protocol beneath Coinbase's new offer. They sit alongside Coinbase's variable-rate loans, which have no set due date. Before a fixed-rate borrower confirms a loan, Coinbase displays an indicative rate and sets the final rate at confirmation. Paying early does not reduce the interest owed. The fixed rate makes the cost more predictable, while the due date changes when collateral can be put at risk.

Coinbase says a fixed-rate loan must be repaid in full by maturity or it becomes eligible for liquidation. Morpho's liquidation rules place the healthy-loan post-maturity trigger strictly after the deadline. At the exact maturity time, a healthy position is not yet liquidatable through that route. Once the deadline has passed with debt outstanding, a liquidator can repay the debt and receive collateral even if the position's loan-to-value ratio is still healthy.

Collateral remains in place at the deadline unless a liquidator executes a transaction. Once the loan is past due, a liquidator can repay its debt and take collateral under Morpho's post-maturity rules. A different trigger can apply sooner: if falling collateral value or rising debt pushes a loan beyond its liquidation threshold, Morpho permits health-based liquidation before maturity. The borrower therefore faces both a collateral-health threshold and a repayment deadline.

Coinbase says it sends maturity reminders seven days, three days and 24 hours before a fixed-rate loan comes due. Borrowers must repay the full balance by the deadline even when the reminders arrive and the loan-to-value ratio stays healthy. The amount of collateral backing the debt can remain sufficient while the unpaid balance creates a separate reason for a liquidator to act after maturity.

Coinbase lists crypto-backed borrowing for verified US customers outside New York and limited access in the UK. Morpho specifies Bitcoin collateral for this fixed-rate launch; Coinbase says collateral options can differ between fixed and variable loans. The available rate and borrowing limit vary by loan and appear in the product. Coinbase also says borrowers cannot convert an existing loan between fixed and variable rates, making the stated maturity date and total repayment amount terms to check before confirming.

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