Arch Lending Eyes Tokenized Stocks as Its Next Lending Market

Arch Lending plans to accept tokenized equities as collateral “pretty soon,” expanding its lending business beyond cryptocurrencies and tokenized commodities as onchain stocks gain traction.

Arch co-founder and chief revenue officer Himanshu Sahay said the lender sees growing potential for credit against tokenized stocks, although Bitcoin still accounts for more than 80% of Arch’s existing loan book.

Tokenized stocks emerge as new collateral

The move comes as the tokenized-equity market has expanded sharply over the past year. Distributed tokenized stock value has climbed to about $3.15 billion from roughly $630 million a year ago, representing a roughly fivefold increase, according to RWA.xyz data.

Sahay pointed to tokenized equities issued by Superstate, Robinhood and Securitize as potential sources of lending demand. While tokenized stocks have grown rapidly, lending against them remains relatively limited.

Arch expects that to change as more lenders enter the market and compete to provide credit against the same tokenized assets.

Arch expands beyond Bitcoin

Bitcoin remains the foundation of Arch’s lending business, accounting for more than 80% of its existing loan book.

The lender has nevertheless been expanding into tokenized real-world assets. Arch recently launched loans backed by Paxos Gold (PAXG) and Tether Gold (XAUt), adding tokenized gold to its collateral options.

The lender has also seen growing interest in XRP as collateral, particularly from US borrowers, although Arch has not disclosed the volume of XRP-backed loans.

Tokenized equities would represent another step in that expansion, giving borrowers a way to access liquidity without selling their exposure to stocks represented onchain.

Tokenized stocks are already entering lending markets

Arch would not be the first lender to use tokenized equities as collateral.

In February, Ondo Finance launched DeFi lending markets for two of its tokenized ETFs through Morpho. The products, representing the SPDR S&P 500 ETF and Invesco QQQ, can be used as collateral for borrowing on Ethereum.

Tokenized stocks are also finding uses beyond dedicated lending markets. Kraken made 10 xStocks eligible to back futures and margin positions in July, while Coinbase’s B20 stocks launched on Base in August with price-feed infrastructure designed to support applications including DeFi borrowing and lending.

These developments show how tokenized equities are moving beyond simple onchain representations of traditional stocks and toward broader financial use cases.

The lending market is still taking shape

Despite the rapid growth of tokenized stocks, the lending market around them remains relatively small.

Arch expects more lenders to enter as the pool of tokenized collateral expands. That could eventually create competition among lenders for the same assets, potentially giving tokenized-stock holders more options for accessing credit.

For Arch, the planned expansion would add equities to a collateral base that already includes Bitcoin and tokenized gold, while reflecting a broader shift toward using real-world assets as productive onchain financial instruments.