Crypto lender Arch Lending plans to expand into loans backed by tokenized equity as the market for onchain stocks expands and lenders begin exploring new uses for assets as collateral.
Arch co-founder and chief revenue officer Himanshu Sahay told Cointelegraph’s Chain Reaction podcast that the lender plans to enter the market “very soon,” pointing to the need for loans against tokenized stocks.
Sahay said tokenized equity has grown rapidly over the past year, but lending against assets remains limited and predicts more lenders will enter the market.
He points to tokenized equity issued by companies including Superstate, Robinhood and Securities, predicting that multiple lenders will eventually participate in the market to provide loans against assets.
Source: Cointelegraph
Arch has already expanded beyond cryptocurrencies into tokenized real-world assets, launching loans backed by Paxos Gold and Tether Gold in recent weeks, according to Sahay.
But crypto still dominates Arch’s existing loan book, with bitcoin (BTC) accounting for more than 80%, Sahay said. He added that lenders have recently seen growing interest in XRP as collateral, particularly among US borrowers.
Related: Kraken brings DeFi yields to tokenized stocks and ETFs
Tokenized stocks enter the debt market
Arch won’t be the first lender to enter the tokenized equity credit market, with tokenized stock and exchange-traded funds (ETFs) already entering debt and collateral products.
In February, Ondo Finance on Debt marketplace for its two tokenized ETFs through integration with DeFi lending protocol Morpho. Ondo’s tokenized versions of the SPDR S&P 500 ETF and Invesco QQQ can be used as collateral to borrow on Ethereum.
Tokenized stocks are also beginning to find use outside of the dedicated debt market. Kraken created 10 xStocks qualified In July to back futures and margin positions, while Coinbase’s B20 stocks launched in August to base price-feed infrastructure designed to support uses including DeFi borrowing and lending.
Tokenized equity. Source: RWA.xyz
The growth in lending usage comes as the tokenized equity market itself has expanded sharply. According to RWA.xyz data, the value of distributed tokenized stock has grown to about $3.15 billion from about $630 million a year ago.
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