Coinbase (COIN +0.35%), one of the most popular crypto exchanges, has offered on-chain Bitcoin (BTC +0.59%)-backed loans since January 2025. These loans allow you to borrow USDC against your Bitcoin, but until recently, only variable-rate loans were available.

On Sept. 22, Coinbase announced fixed-rate Bitcoin-backed loans through Morpho Midnight. While this could be a useful option in certain situations, investors should understand the terms first.

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How Coinbase’s fixed-rate Bitcoin-backed loans work

Coinbase offers loans through its Coinbase Borrow service. Morpho Midnight is a lending protocol that operates on Base, an Ethereum Layer-2 blockchain. When you borrow this way, your Bitcoin is converted to…