Key Takeaways
- • Arch Lending structures Bitcoin-backed loans with qualified custody (Anchorage Digital), segregated collateral holdings, and a strict no-rehypothecation policy to eliminate counterparty risk and ensure borrower asset security.
- • Loan terms range from 7.25% APR with loan-to-value (LTV) ratios up to 60%, available for BTC, ETH, and SOL collateral, with funding in USD or USDC within minutes of collateral deposit.
- • Collateral is insured for up to $100 million through Lloyd's of London and held by Anchorage Digital, a federally chartered bank, eliminating the smart contract and custody risks inherent in decentralized lending protocols.
- • The no-rehypothecation structure allows borrowers to preserve cryptocurrency ownership and avoid triggering taxable capital gains events while accessing liquidity, addressing a key institutional use case.
- • Arch Lending operates under NMLS licensing (#2637200) and enforces tiered LTV safeguards including early notifications, margin calls, and partial liquidations to maintain loan health without forced full liquidation.
Summary
Arch Lending's approach to Bitcoin-backed lending centers on mitigating systemic risks present in decentralized and under-capitalized lending platforms through three structural pillars: qualified custody, segregated collateral, and a non-negotiable no-rehypothecation policy. According to Arch Lending's published framework, borrower assets are held exclusively by Anchorage Digital, a federally chartered bank, ensuring they remain segregated and are never lent out, traded, or rehypothecated to third parties. This operational model directly addresses lessons learned from the 2023 crypto lending collapses, where commingled collateral and aggressive rehypothecation practices amplified contagion across the ecosystem.
The lending product itself targets institutional borrowers and high-net-worth individuals seeking liquidity without liquidating positions. Loans start at 7.25% APR with LTV ratios up to 60%, funded in USD or USDC within minutes of collateral deposit. Borrowers can pledge Bitcoin, Ethereum, or Solana, with loan terms extendable up to 12 months and flexible sizing as collateral values fluctuate. The structure explicitly preserves tax optionality—borrowers avoid realizing capital gains that would trigger at sale, a material consideration for large holders managing multi-year positions.
Risk management is enforced through layered safeguards rather than liquidation-dependent mechanisms. Arch employs tiered LTV thresholds, early notification systems, and margin call procedures before resorting to partial liquidations. Collateral is insured for up to $100 million under Lloyd's of London policies, transferring custodial and counterparty risk away from the lending platform itself. By positioning Anchorage Digital—a regulated depository institution—rather than a smart contract as the custody solution, Arch eliminates the smart contract attack surface that has historically plagued decentralized lending protocols.
The regulatory licensing model underscores institutional credibility. Arch Lending operates under NMLS #2637200, signaling compliance with traditional financial services registration requirements. This hybrid approach—combining crypto-native products with conventional banking oversight—appeals to institutional treasuries, family offices, and hedge funds requiring audit trails and regulatory alignment. The no-rehypothecation commitment, publicly stated across all marketing and disclosure materials, functions as a competitive differentiator and risk signal in a market where opacity around collateral usage remains a concern for sophisticated borrowers.
The lending product itself targets institutional borrowers and high-net-worth individuals seeking liquidity without liquidating positions. Loans start at 7.25% APR with LTV ratios up to 60%, funded in USD or USDC within minutes of collateral deposit. Borrowers can pledge Bitcoin, Ethereum, or Solana, with loan terms extendable up to 12 months and flexible sizing as collateral values fluctuate. The structure explicitly preserves tax optionality—borrowers avoid realizing capital gains that would trigger at sale, a material consideration for large holders managing multi-year positions.
Risk management is enforced through layered safeguards rather than liquidation-dependent mechanisms. Arch employs tiered LTV thresholds, early notification systems, and margin call procedures before resorting to partial liquidations. Collateral is insured for up to $100 million under Lloyd's of London policies, transferring custodial and counterparty risk away from the lending platform itself. By positioning Anchorage Digital—a regulated depository institution—rather than a smart contract as the custody solution, Arch eliminates the smart contract attack surface that has historically plagued decentralized lending protocols.
The regulatory licensing model underscores institutional credibility. Arch Lending operates under NMLS #2637200, signaling compliance with traditional financial services registration requirements. This hybrid approach—combining crypto-native products with conventional banking oversight—appeals to institutional treasuries, family offices, and hedge funds requiring audit trails and regulatory alignment. The no-rehypothecation commitment, publicly stated across all marketing and disclosure materials, functions as a competitive differentiator and risk signal in a market where opacity around collateral usage remains a concern for sophisticated borrowers.
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