Ledger adds Bitcoin-backed stablecoin loans through Morpho

Ledger has turned its hardware wallet into a lending tool. The company said on October 7 that users can now borrow the stablecoins USDC or USDT against wrapped Bitcoin, using the Morpho protocol, without selling their coins or handing them to a lender.

Called Crypto Loan, the feature was built with Morpho, a decentralized lending protocol, and a firm called Yield.xyz that handles the technical side inside the Ledger Wallet app. Ledger showed it at the TOKEN2049 conference in Singapore. Morpho said the rollout began the same day.

How a Bitcoin loan works here

Here is the mechanic. A user locks wrapped Bitcoin, either Coinbase's cbBTC or the older wBTC, into an isolated Morpho market. Against that collateral, the app lets them draw USDC or USDT. Morpho's own write-up stressed that the coins stay in smart contracts the borrower controls, and that a borrower can repay and withdraw at any time while the position stays healthy. This is a self-custody design, closer to a loan arranged by software than one booked by a bank.

Borrowing rates move with demand in each market. Ledger has not published a fixed rate or an origination fee, and the cost of a loan shifts as more people borrow from the same pool. That is standard for on-chain lending. A cheap loan today can get dearer next week.

Why Ledger is in lending now

Most people know Ledger as a maker of crypto wallets, the devices that keep private keys offline. Lending is a newer line. The company already runs Ledger Earn, also built on Morpho, which pays yield on deposited stablecoins. Crypto Loan plugs into the same pipes.

Paul Frambot, Morpho's co-founder, framed the two products as feeding each other. "Crypto Loan now complements Ledger Earn, also powered by Morpho, to create a powerful liquidity flywheel within Ledger Wallet: stablecoins deposited through Earn can fund the very loans Bitcoin holders now access through Crypto Loan, all within the same self-custodial environment," he said.

Yield.xyz supplies the integration that makes the loans appear inside the wallet. Its chief executive, Serafin Lion Engel, called the setup "the integration model we've built Yield.xyz around." The same firm powers Coinbase's Bitcoin-backed borrowing, so the engine here has a track record.

Morpho is not a small venue. By October 7 the protocol held $16.94 billion in deposits and $5.63 billion in outstanding loans, according to figures cited by TokenPost. Ledger's earlier stablecoin tie-up with Morpho drew more than $100 million in deposits on its own.

Wrapped Bitcoin and the catch

There is a catch worth stating plainly. The collateral is wrapped. It is a token on Ethereum, cbBTC or wBTC, meant to track one Bitcoin and backed, in theory, by one held in reserve. A user trusts the wrapper as much as the loan itself.

Then there is price. Each market liquidates a loan at an 86% loan-to-value ratio, TokenPost reported. In plain terms, if the posted Bitcoin loses enough value that the debt reaches 86% of it, the position is sold off to repay lenders. A sharp drop can trigger that fast. Bitcoin has had plenty of sharp drops.

The idea is not new. Coinbase runs a similar cbBTC borrowing product that, as of September 22, held more than $1.4 billion in loans against roughly $3 billion in collateral, crypto.news reported. The pitch mirrors a home equity line at a bank: borrow against an asset the owner expects to keep, rather than sell it and give up the upside. The risk mirrors it too.

What to watch

Availability is the near-term question. Ledger said the rollout is gradual and depends on the user's country, without naming where loans go live first. Neither Ledger nor Morpho has published a full fee schedule. Two things are worth tracking: how far borrowing rates climb when markets get busy, and whether regulators treat a self-custody wallet that arranges loans any differently from an exchange that does.

For now the product is live and small. The deposit and loan figures over the next few weeks will show whether wallet holders actually want to borrow against their coins, or just like knowing they can.