Coinbase enables $1 million loans backed by staked ether, avoiding forced sales

Coinbase has introduced a new borrowing product that allows U.S. users to access as much as $1 million in liquidity by using cbETH — its tokenized version of staked ether — as collateral, offering a way to raise cash without selling or unstaking ETH.

The feature is available immediately to eligible customers across the U.S., excluding New York. Users can borrow USDC against cbETH held on Coinbase and seamlessly convert the stablecoin into dollars within the platform.

The launch points to growing demand for liquidity solutions tied to staked assets, as ether staking increasingly becomes a long-term holding strategy rather than a short-term yield trade.

Borrowing is powered by Morpho, an onchain lending protocol that enables overcollateralized loans through smart contracts. Interest rates are variable and determined by market conditions, and loans carry no fixed repayment schedule or maturity date.

Risk management centers on collateral thresholds. Coinbase has previously said borrowers must maintain a loan-to-value ratio below 86% to avoid automatic liquidation and penalties — a level that could come under pressure during sharp swings in ether prices.

Allowing cbETH to be used as collateral extends the functionality of staked ether beyond passive yield generation. Borrowers can maintain exposure to ETH price movements and staking rewards while unlocking liquidity for portfolio adjustments, large purchases, or one-time expenses.

The move comes as competition intensifies among centralized exchanges and decentralized finance platforms racing to offer more capital-efficient borrowing products tied to staking derivatives. Tokenized assets like cbETH have steadily gained traction among investors seeking to avoid the opportunity cost of locked capital.

Coinbase said the product is now live for U.S. users outside New York and is part of a broader effort to make crypto holdings more flexible without forcing outright sales during volatile market conditions.