Arch Lending eyes tokenized stocks as next collateral market

Arch Lending, a crypto lender, is set to enter the tokenized equity market as they seek new collateral options for loans. Himanshu Sahay, co-founder and chief revenue officer of Arch Lending, mentioned on a podcast that the company plans to move into this market "pretty soon," citing the need for credit against tokenized stocks.

Tokenized equities have experienced rapid growth over the past year, but lending against them remains limited, with more lenders expected to join the market. The potential for multiple lenders to provide credit against tokenized equities has been identified, with firms such as Superstate, Robinhood, and Securitize already issuing these assets.

Arch Lending has previously expanded to include tokenized real-world assets, like Paxos Gold and Tether Gold-backed loans. Currently, the majority of Arch Lending's loans are in Bitcoin, accounting for over 80%. Interest in XRP as collateral has also been growing, particularly among US borrowers. Arch Lending would not be the first lender to enter the tokenized equity credit market, as Ondo Finance launched DeFi lending markets for two of its tokenized ETFs in February.

Kraken has also allowed 10 xStocks to back futures and margin positions, and Coinbase's B20 stocks launched on Base in August, with price-feed infrastructure supporting DeFi borrowing and lending. The expansion of the tokenized equities market has seen a significant increase in distributed value, reaching around $3.15 billion from approximately $630 million a year ago.