Coinbase Launches Tokenized Gold-Backed USDC Lending
Eligible U.S. users can now leverage PAX Gold as collateral for USDC loans.
1New Collateral Integration
Coinbase has officially enabled USDC borrowing against PAX Gold, marking its first support for non-crypto assets. This feature allows eligible U.S. users to pledge tokenized gold as collateral within the Coinbase app. Previously, the platform restricted borrowing to native digital assets like Bitcoin, Ethereum, XRP, and Solana for its users.
2Infrastructure and Partnership
The lending mechanism operates on the Morpho Blue protocol, specifically utilizing a new USDC/PAXG market on the Base network. Coinbase provides the user interface and customer access, while Morpho supplies the underlying on-chain lending infrastructure. This integration leverages existing systems, requiring no new lending stack to support gold-backed assets.
3Tokenized Gold Mechanics
Each PAXG token represents one fine troy ounce of physical gold stored in LBMA-accredited vaults. By pledging these tokens, users can obtain USDC liquidity without liquidating their physical gold holdings. The system ensures that the gold remains securely stored while providing the borrower with immediate access to stablecoin capital.
4Market Scale and Liquidity
The underlying Morpho integration currently supports approximately $3.4 billion in total collateral and over $1.7 billion in active loans. By adding gold to this existing framework, Coinbase taps into a massive asset class. This expansion offers a streamlined way for investors to raise dollar liquidity without leaving the exchange.
5Loan Terms and Governance
Borrowers are subject to variable interest rates determined by the Morpho market rather than Coinbase itself. There is no fixed repayment schedule or mandatory minimum payment requirement for these loans. However, positions are strictly governed by loan-to-value thresholds, meaning collateral can be liquidated if the value of pledged PAXG drops.
6Geographic and User Restrictions
Access to this new borrowing feature is currently limited to eligible customers residing in the United States. Notably, residents of New York are excluded from this service. Users can view their specific borrowing limits and individual terms directly within the Coinbase application, which manages the user-facing side of the lending process.
7Broader Market Context
The global gold market is valued at approximately $30 trillion, yet only a few billion dollars worth has been tokenized to date. Coinbase’s move represents a significant step in bridging traditional precious metals with decentralized finance. This integration highlights the growing trend of bringing real-world assets into the crypto ecosystem.
8Strategic Implications
This development signals a shift toward diversifying collateral types beyond volatile cryptocurrencies. By incorporating regulated gold tokens, Coinbase provides a more stable option for users seeking liquidity. Future growth in this sector will likely depend on the continued adoption of tokenized real-world assets and the stability of lending protocols.
Original article: DailyCoin — Coinbase Launches Tokenized Gold-Backed USDC Lending