Coinbase has expanded its on-chain lending product to accept XRP, Dogecoin, Cardano, and Litecoin as collateral, as of February 18, 2026. Qualified U.S. customers can now borrow up to $100,000 in USDC against these four altcoins without selling their holdings or triggering a taxable event.
The move extends a lending engine that previously supported only Bitcoin and Ethereum. Built on the DeFi protocol Morpho and running on Coinbase's Base Layer 2, the product bridges familiar exchange-grade UX with decentralized lending infrastructure.
Four Altcoins Unlock Liquidity They Never Had
Until now, holders of XRP, DOGE, ADA, and LTC who needed cash had two options: sell and pay capital gains tax, or move assets to a standalone DeFi protocol and navigate liquidation parameters on their own. Coinbase's expansion eliminates both friction points.
The process works in three steps. Deposit eligible tokens into a non-custodial Morpho vault on Base. Borrow USDC at a variable interest rate determined by market conditions. Repay the loan on any timeline, with no fixed maturity date, as long as the loan-to-value ratio stays healthy.
For XRP, DOGE, ADA, and LTC loans, the maximum LTV sits at 49 percent. Liquidation triggers at 62.5 percent. That means a borrower pledging $10,000 in XRP can draw up to $4,900 in USDC, but if XRP drops enough to push the loan value past 62.5 percent of the collateral, the vault will automatically sell enough tokens to cover the shortfall.
No credit checks apply. Approval is based entirely on the value of pledged assets, not a FICO score.
Why Morpho on Base, Not a Traditional Lending Desk
Coinbase could have built a custodial lending product with a centralized risk engine. Instead it chose Morpho, a permissionless lending protocol that has processed billions in DeFi deposits since its Ethereum mainnet launch.
The choice matters for three reasons.
First, transparency. Morpho vaults are on-chain. Anyone can audit the collateral ratios, liquidation parameters, and interest rate curves in real time. After the Celsius, BlockFi, and Genesis collapses of 2022 and 2023, on-chain verifiability is no longer a nice-to-have for lending products.
Second, composability. Because the vaults live on Base, borrowed USDC is immediately usable across the Base ecosystem. Borrowers can bridge it, swap it, or spend it through any Base-compatible application without an additional withdrawal step.
Third, non-custodial architecture. Collateral sits in smart contracts, not on Coinbase's balance sheet. If Coinbase the company ever faced operational issues, the Morpho vaults would continue to function independently. This is a meaningful distinction for anyone who remembers the FTX fallout and the difference between "your keys" and "their keys."
The Tax Play That Makes This Product Compelling
The headline feature is not the interest rate or the LTV. It is the tax treatment.
Under current U.S. tax guidance, borrowing against crypto is not a taxable event. Selling crypto is. For a holder sitting on significant XRP or ADA gains, the difference between selling $50,000 in tokens and borrowing $50,000 against them could be a five-figure tax bill.
This is the same logic that drives traditional securities-backed lending. Wealthy individuals borrow against stock portfolios to avoid realizing capital gains, a strategy sometimes called "buy, borrow, die." Coinbase is bringing that playbook to altcoin holders with balances as small as a few thousand dollars.
The catch: variable interest rates. If borrowing costs spike during a volatile market, the cost of maintaining the loan could exceed what the borrower would have paid in taxes. And if the collateral drops sharply enough to trigger liquidation, the borrower not only loses the tokens but also owes taxes on the forced sale.
Who Benefits Most, and Who Should Be Careful
The clearest winners are long-term altcoin holders who need short-term liquidity. Someone who bought XRP at $0.30 and holds it at $2.50 would face substantial capital gains on a sale. Borrowing USDC against that position lets them cover an expense, make a purchase, or even top up a crypto card without touching their tax basis.
Traders using leverage should think twice. A 49 percent LTV with a 62.5 percent liquidation threshold leaves only 13.5 percentage points of breathing room. DOGE can move 20 percent in a single day. A leveraged position collateralized with a meme coin during a flash crash could liquidate before the borrower even checks their phone.
The geographic restriction also matters. The product is available to verified U.S. customers only, with New York excluded due to BitLicense requirements. International users, including those in the EU or UK, remain locked out for now, though Coinbase has signaled plans for broader access.
From BTC-Only to a Full Altcoin Collateral Menu
Coinbase's lending timeline tells a clear story of expansion.
In January 2026, the exchange launched USDC loans backed by staked Ethereum, with a maximum borrow limit of $1 million. That product validated the Morpho-on-Base architecture and proved demand existed.
Adding BTC and ETH spot collateral followed. Now the four-altcoin expansion signals that Coinbase sees viable lending markets across the long tail of liquid tokens, not just the top two.
The strategic implication is that every major token in the Coinbase ecosystem could eventually become borrowable collateral. If SOL, AVAX, or LINK follow, Coinbase would effectively become a full-stack DeFi bank, offering yield, lending, and spending products (via the Coinbase card) all under one roof.
For the broader market, this product puts pressure on standalone DeFi lending protocols. When Coinbase wraps Morpho in a compliant, KYC-verified interface with customer support, the value proposition of navigating raw DeFi contracts directly weakens for the average user.
FAQ
Do I need to pass a credit check to borrow? No. Loan approval is based entirely on the value of your pledged crypto collateral. No FICO score, income verification, or credit history is required.
What happens if my collateral drops in value? If your loan-to-value ratio reaches the liquidation threshold of 62.5 percent, the Morpho vault will automatically sell enough of your collateral to bring the ratio back to a safe level. You lose the liquidated tokens and may owe taxes on the forced sale.
Is borrowing against crypto a taxable event in the U.S.? Under current guidance, taking out a loan against crypto collateral is generally not a taxable event. However, if your collateral is liquidated, that forced sale is taxable. Consult a tax professional for your specific situation.
Can I repay the loan early? Yes. There is no fixed repayment schedule or early repayment penalty. You can repay partially or in full at any time.
Is this available outside the United States? Not yet. The product is currently limited to verified U.S. customers, excluding New York residents. Coinbase has indicated plans to expand internationally.
Overview
Coinbase has added XRP, Dogecoin, Cardano, and Litecoin as collateral options for its Morpho-powered, Base-native USDC lending product. U.S. customers can borrow up to $100,000 without selling tokens or triggering taxable events, at a maximum 49 percent LTV with liquidation at 62.5 percent. The product uses non-custodial smart contract vaults, requires no credit checks, and has no fixed repayment timeline. The expansion extends a lending product that began with staked ETH in January 2026 and positions Coinbase as a DeFi-powered lending desk that could eventually accept every liquid token on its platform.
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