Arch Lending Eyes Expansion into Loans Backed by Tokenized Stocks

Arch Lending’s Plans for New Loan Products

Arch Lending co-founder and chief revenue officer Himanshu Sahay revealed on Cointelegraph’s Chain Reaction podcast that the company plans to launch loans collateralized by tokenized equities soon. He highlighted the rapid growth of tokenized stocks over the past year, while noting that lending against such assets remains relatively limited.

The firm has already expanded beyond cryptocurrencies by offering loans backed by tokenized real-world assets such as Paxos Gold and Tether Gold. However, Bitcoin still dominates the loan book, constituting over 80% of the collateral portfolio.

Sahay also mentioned a recent increase in demand for using XRP as collateral, especially among U.S. borrowers, signaling diversification in loan collateral types and evolving borrower preferences.

Tokenized Stock Market and Lending Landscape

Arch Lending is not the first to venture into lending backed by tokenized equities. The market for such products has been growing within DeFi and centralized finance platforms alike.

In February, Ondo Finance introduced DeFi lending markets for two tokenized ETFs through its integration with the lending protocol Morpho, enabling the tokenized SPDR S&P 500 ETF and Invesco QQQ as Ethereum borrowing collateral.

Additionally, Kraken made 10 tokenized stocks (xStocks) eligible to support futures and margin trading in July, and Coinbase launched B20 tokenized stocks on its Base platform in August, incorporating price-feed infrastructure aimed at supporting uses like decentralized finance borrowing and lending.

This surge in lending-related applications corresponds with rapid market expansion. Data from RWA.xyz shows the aggregate distributed tokenized stock value soared from about $630 million a year ago to roughly $3.15 billion today.