For crypto investors who have spent years accumulating digital assets, one of the hardest financial decisions is also one of the simplest: what happens when you need cash?
Selling can create a taxable event, reduce exposure to an asset you may expect to appreciate, and permanently shrink the position you worked to build.
Borrowing against crypto offers another option—but it introduces a completely different set of questions.
Who controls the collateral? Is it being lent to somebody else? At what point can it be liquidated? How quickly can a borrower respond to a falling market? And perhaps most importantly after the failures of several major crypto lenders: what happens to the collateral if something goes wrong with the lender itself?
Those are exactly the questions that have shaped Arch Lending.
Founded in February 2022 by Dhruv Patel and Himanshu Sahay, Arch entered crypto lending at almost the worst—or perhaps the most instructive—possible moment. The company was born just as the digital-asset lending industry was heading toward one of the most difficult periods in its history.
Instead of retreating from that environment, Arch built its model around lessons learned from it.
Today, the company offers overcollateralized loans against Bitcoin, Ethereum, Solana and XRP, along with newer lending options involving tokenized gold. Its platform emphasizes qualified custody, no rehypothecation, defined liquidation thresholds and direct human support.
For borrowers comparing crypto-backed lenders, that makes Arch worth understanding.
Born During Crypto Lending’s Most Difficult Period
Arch was founded by crypto investors who say they were frustrated by the lack of financial services designed for people whose wealth increasingly existed outside traditional stocks, bonds and bank accounts.
Patel, Arch’s co-founder and CEO, previously worked at Brex building financial products for businesses. Co-founder Himanshu Sahay brought an engineering and technology background that included Snapchat, Tinder and Bird. Arch says the founders’ goal was to combine financial infrastructure with the type of user experience consumers had come to expect from modern technology companies.
The timing was significant.
Arch was founded in February 2022. Over the months that followed, the crypto industry experienced the collapses of Terra, Celsius, Voyager, BlockFi, FTX and other companies or projects that damaged confidence in centralized crypto finance.
One of the biggest lessons from that period was that borrowers needed to understand more than an advertised interest rate.
They needed to know what happened to their collateral after they deposited it.
Arch increasingly made that question central to its lending model.
The company initially raised $2.75 million while developing its alternative-asset lending platform. By August 2024, Arch announced another $75 million consisting of an oversubscribed $5 million equity round and a $70 million loan-financing facility supplied by Galaxy. Investors in the company have included Morgan Creek Digital, Castle Island Ventures, Galaxy Ventures and BitGo Ventures.
That funding gave Arch additional lending capacity, but its most important differentiator for borrowers may be what it says it doesn’t do with collateral.
No Rehypothecation
Rehypothecation sounds technical, but every crypto borrower should understand it before taking out a loan.
When collateral is rehypothecated, a lender may take assets pledged by its customers and lend, invest or otherwise deploy those assets elsewhere.
That can create another layer of counterparty risk.
Arch says it follows a strict zero-rehypothecation policy.
According to Arch, collateral is not lent out, traded, staked or otherwise deployed to generate additional revenue. Instead, pledged assets remain in custody supporting the borrower’s loan.
That distinction matters.
A borrower should never assume that depositing Bitcoin with two different lenders creates the same risk simply because both loans have the same LTV or interest rate.
CryptoLoanAdvisor believes custody structure and rehypothecation policy should be examined alongside APR when comparing lenders.
Anchorage Digital Holds the Collateral
Arch currently uses Anchorage Digital Bank as its qualified custodian.
Anchorage Digital is a federally chartered digital-asset bank regulated by the Office of the Comptroller of the Currency. Arch says collateral is maintained under segregated custody and structured to be bankruptcy-remote from Arch’s corporate assets.
Arch also states that Anchorage maintains $100 million in Lloyd’s of London insurance coverage covering specified risks, subject to the policy’s terms and exclusions.
For loans above $100,000, Arch says segregated wallets can be made available, along with blockchain explorer links allowing borrowers to verify the location of their collateral on-chain.
Arch itself does not hold the private keys.
That structure addresses one of the most important questions CLA believes every borrower should ask:
Who actually controls my crypto while the loan is outstanding?
BTC, ETH, SOL and XRP
Arch’s standard crypto-backed lending platform currently supports four major digital assets:
Bitcoin (BTC)
Ethereum (ETH)
Solana (SOL)
XRP
The company’s latest published loan terms show that these assets do not receive identical LTV treatment.
Bitcoin currently has the highest standard starting LTV:
BTC: 60% starting LTV, 70% margin call and 80% partial-liquidation level.
Ethereum is slightly more conservative:
ETH: 55% starting LTV, 65% margin call and 75% partial liquidation.
Solana and XRP carry lower starting thresholds:
SOL: 45% starting LTV, 55% margin call and 65% partial liquidation.
XRP: 45% starting LTV, 55% margin call and 65% partial liquidation.
That difference is important.
A borrower pledging $100,000 worth of Bitcoin should not assume the same borrowing capacity applies to $100,000 of XRP or Solana.
The asset being pledged directly affects the safety buffer between the initial loan and a margin call.
Arch Uses Partial Liquidation
One of the more borrower-friendly features of Arch’s structure is its approach to liquidation.
If collateral values fall far enough, liquidation remains a real risk. A crypto-backed loan does not eliminate volatility simply because the borrower didn’t sell the crypto when taking out the loan.
Arch uses warning levels, margin-call levels and partial-liquidation thresholds.
Using Bitcoin as an example, the company currently considers an LTV of 60% or below healthy. At 65%, the borrower receives a warning. At 70%, a margin call is triggered and the borrower generally has 24 hours to add collateral or repay part of the loan. At 80%, Arch may partially liquidate collateral to return the loan to its target LTV.
Rather than automatically liquidating an entire position, Arch Lending says it sells only enough collateral to restore the loan to the applicable starting LTV.
A partial-liquidation fee is typically around 2%, subject to applicable state law.
This does not make liquidation harmless. Selling collateral during a market decline can still generate significant financial and potentially tax consequences.
But understanding whether a lender uses partial or full liquidation should be part of every borrower’s due diligence.
What Does an Arch Loan Cost?
Arch currently publishes tiered pricing based largely on loan size.
For BTC-, ETH- and SOL-backed loans, published APRs for borrowers making monthly interest payments currently range from approximately 7.25% to 10.49%, with lower pricing generally available on larger loans.
Origination fees currently range from approximately 0.25% to 1.49%, depending on loan size.
Borrowers can also select structures where interest is deferred until maturity, although the applicable rate may be higher.
XRP deserves separate attention.
Arch currently prices XRP-backed lending differently. Published XRP APRs start substantially higher on smaller loans and decline as the loan size increases. For example, loans below $500,000 currently show a 12% interest rate plus a 1.5% origination fee, resulting in a stated 13.5% APR. Larger XRP loans receive progressively lower pricing.
That is exactly why CLA encourages borrowers to compare the actual terms attached to their specific collateral rather than relying on a lender’s headline “rates starting at” number.
Arch’s standard loans currently offer terms of up to 12 months, with options to roll over or refinance. There is no prepayment penalty.
The default minimum loan amount is currently $5,000, although minimums can vary by state and collateral type.
No Traditional Credit Check
Because Arch loans are overcollateralized by digital assets, the company says it does not require a traditional credit check.
Borrowers still must complete identity verification, or KYC, and businesses may be subject to additional KYB requirements.
Once onboarding and loan documents are completed and collateral is received, Arch says disbursement is typically processed within the same business day.
Borrowers can receive proceeds through USD bank transfers or USDC, depending on eligibility and the particular loan.
Arch Moves Into Tokenized Gold
Arch has also begun expanding beyond traditional cryptocurrencies.
The platform now lists PAX Gold (PAXG) and Tether Gold (XAUT) as eligible collateral for certain borrowers.
Both products can currently support starting LTVs of up to 75%, significantly higher than Arch’s standard crypto collateral thresholds. The minimum loan size is $250,000, and published APRs currently range from about 7.25% to 9.25% for qualifying 12-month loans with monthly interest payments.
Why the higher LTV?
Unlike Bitcoin, Ethereum, Solana or XRP, PAXG and XAUT are tokens designed to represent physical gold.
For crypto lenders, tokenized real-world assets could eventually open an entirely new category of collateral.
Arch’s move into gold-backed tokens suggests the company still views its original mission more broadly than Bitcoin lending alone.
More Than a One-Time Loan
Arch has also introduced products aimed at long-term Bitcoin holders.
Its Perpetual Income program is designed to provide recurring cash distributions against Bitcoin rather than operating as a conventional one-time loan.
The product generally starts with substantially lower LTVs—typically 10% to 30%—and currently requires a minimum deposit of one Bitcoin. Interest is capitalized rather than paid monthly, and Arch manages annual loan adjustments designed to generate additional distributions over time.
That type of strategy comes with additional assumptions about Bitcoin prices, future borrowing capacity and interest expense. It should not be confused with guaranteed income.
Arch has also developed a product called TaxShield, combining BTC-backed lending with purchases of hosted Bitcoin-mining equipment that may qualify for depreciation treatment. Because tax results depend heavily on individual circumstances and tax law, borrowers considering strategies of this type should involve qualified tax professionals before proceeding.
The broader point is that Arch increasingly appears to be positioning itself as a financial-services platform for people holding significant digital assets—not simply as a place to obtain a short-term Bitcoin loan.
Human Support Still Matters
Crypto lending may operate digitally, but margin calls rarely occur at convenient times.
Arch emphasizes what it calls concierge or “white-glove” customer service. The company currently provides support through chat, email, phone and one-on-one calls.
That can matter more than borrowers realize.
When collateral markets are falling rapidly, being able to communicate with an actual person about a collateral transfer, repayment or margin call can become far more important than the appearance of the lender’s app.
Technology may initiate the loan.
Customer service can help determine what happens when something goes wrong.
The CryptoLoanAdvisor Takeaway
Arch represents an important evolution in centralized crypto-backed lending.
The company’s model centers on several features CLA believes borrowers should investigate with any lender: qualified custody, no rehypothecation, bankruptcy-remote collateral structures, transparent LTV thresholds, defined cure periods and partial rather than automatic full liquidation.
Arch currently supports a wider collateral mix than many Bitcoin-only lenders, including BTC, ETH, SOL, XRP and certain tokenized-gold assets. It also provides borrowers with options to add collateral, release excess collateral, refinance or roll over loans and repay early without a prepayment penalty.
But no crypto-backed loan is risk-free.
Interest expense matters.
Origination fees matter.
Custody matters.
And LTV may matter most of all.
A borrower taking the maximum available LTV has far less protection from market volatility than someone borrowing conservatively against the same portfolio.
That is why CryptoLoanAdvisor’s philosophy remains simple:
Don’t just ask how much you can borrow. Ask what has to happen for your collateral to be sold.
Arch has built much of its platform around answering that question more clearly than the crypto-lending industry historically did.
For borrowers comparing their options, that may be one of the most important developments of all.
About Crypto Loan Advisor
Crypto Loan Advisor is an independent educational resource designed to help consumers understand and compare crypto-backed lending options, including loan-to-value ratios, collateral requirements, custody structures, liquidation risk, rates and fees.
Crypto Loan Advisor is not a lender and does not provide financial, investment, legal or tax advice. Crypto-backed loans involve significant risks, including margin calls and the potential liquidation of collateral. Rates, LTVs, supported assets and product availability can change. Borrowers should confirm current terms directly with the lender and consult qualified financial and tax professionals when appropriate.
