Arch Lending Targets Tokenized Stocks as Next Collateral Market

Arch Lending is preparing to move deeper into credit markets for tokenized equities, with plans to offer loans backed by onchain representations of stocks and exchange-traded funds (ETFs). Speaking on Cointelegraph’s Chain Reaction podcast, Arch co-founder and chief revenue officer Himanshu Sahay said the lender wants to enter “pretty soon,” citing a growing need for borrowing against tokenized stock assets.

Sahay pointed to rapid expansion in tokenized equities over the past year, while also arguing that lending against those assets remains limited today. He predicted that more lenders will follow, especially as tokenized stocks issued by platforms such as Superstate, Robinhood, and Securitize become more widely used in collateral frameworks.

Key takeaways

• Arch Lending plans to launch loans backed by tokenized equities “pretty soon,” aiming to address limited credit availability for onchain stock assets.
• Sahay said tokenized equities have expanded quickly over the past year, but lending usage still lags the pace of issuance and experimentation.
• Arch’s current loan book is still dominated by crypto collateral: Sahay said Bitcoin makes up more than 80% of exposure.
• Interest in using XRP as collateral is reportedly growing among US borrowers.
• Tokenized equities lending is already emerging via platforms like Ondo Finance and infrastructure providers tied to Ethereum-based lending protocols.

Arch’s shift from crypto-only lending to onchain stocks

While Arch’s core business is rooted in crypto-backed lending, Sahay emphasized that the lender is actively looking for additional collateral categories as the tokenized equities ecosystem matures. The company has already expanded beyond cryptocurrencies into real-world assets (RWAs), offering loans backed by tokenized gold and stablecoin-linked gold products issued by Paxos and Tether, according to Sahay.

Even with that progress, Sahay described Bitcoin as the dominant collateral in Arch’s current lending operations, accounting for more than 80% of the lender’s existing loan book. That detail underscores a transition phase: Arch is expanding its collateral menu, but crypto remains the base business while the market for tokenized equities develops deeper liquidity and clearer credit pathways.

Sahay also noted an uptick in demand for XRP collateral, particularly from borrowers in the United States. For lenders, the relevance of a collateral asset hinges on custody, valuation reliability, liquidation mechanics, and borrower appetite—so increases in specific collateral usage often signal that risk models and market plumbing are becoming more robust.

Tokenized equity credit is already taking shape

Arch would not be the first lender to attempt credit exposure to tokenized equities. Over the past year, tokenized stocks and ETFs have begun appearing across lending and collateral products, suggesting the industry is converging on Ethereum-based rails and DeFi-compatible collateral workflows.

In February, Ondo Finance launched DeFi lending markets for two of its tokenized ETFs through an integration with lending protocol Morpho. Ondo’s tokenized versions of the SPDR S&P 500 ETF and Invesco QQQ can be used as collateral for borrowing on Ethereum.

Beyond dedicated lending venues, other firms have also moved toward broader composability of tokenized equities. Kraken made its 10 xStocks eligible to support futures and margin positions in July. Meanwhile, Coinbase’s B20 stocks launched on Base in August, using price-feed infrastructure designed to support use cases that include DeFi borrowing and lending.

For investors and borrowers, these steps matter because they reduce friction: if tokenized equities can be used across multiple systems—rather than being confined to a single application—then lenders get more reliable access to collateral and liquidation workflows, while borrowers can more easily integrate the assets into existing strategies.

What’s driving demand: the onchain stocks market is growing

The push toward equity-backed lending aligns with expansion in the underlying tokenized equities market. According to RWA.xyz data cited in Cointelegraph’s coverage, distributed tokenized stock value has risen to about $3.15 billion, up from roughly $630 million a year earlier.

That magnitude of growth helps explain why lenders are considering tokenized equities more seriously. However, growth in issued or distributed token value does not automatically translate into deep lending markets. Lenders still need mechanisms to price the collateral, manage volatility, and execute liquidations efficiently—especially if the tokenized asset references traditional equities with their own settlement and liquidity characteristics.

Arch’s stated intent to add equity-collateral loans fits this broader pattern: as tokenized equities scale, the next layer of adoption is typically finance infrastructure—credit, margin, and yield—provided risk teams can support it. The “limited” lending described by Sahay suggests that, despite issuance momentum, the market still has room for additional lenders to compete on terms, collateral support, and risk management.

Why Arch’s timing could matter

Arch’s move comes at a moment when tokenized stocks and ETFs are increasingly being treated as collateral across multiple platforms and use cases. If tokenized equities continue to attract liquidity, lenders that expand collateral coverage earlier may capture relationships with borrowers seeking diversified collateral strategies—particularly when crypto-only borrowing is constrained by liquidity or collateral concentration concerns.

At the same time, the transition is not instantaneous. Sahay’s comments indicate that Arch’s current exposure remains largely tied to crypto, with Bitcoin still representing the vast majority of the existing loan book. That suggests Arch will likely approach tokenized equity lending with caution—building the operational and risk infrastructure needed to support assets with distinct market behavior compared with traditional crypto benchmarks.

For now, readers should watch whether Arch’s tokenized equity lending plans translate into actual launch details—such as which tokenized equities will be supported first, how collateral valuation and liquidation are handled, and whether demand from borrowers grows alongside the broader tokenized equities market. The combination of issuance expansion and the still-limited state of lending could determine how quickly this segment becomes a standard offering for credit providers.