Arch Lending Outlines Safeguards Against Crypto Lending Collapse
In brief
- Arch Lending originated $350M+ in loans with zero reported client losses since February 2022
- Zero-rehypothecation policy prevents lending or staking of customer collateral
- Anchorage Digital provides exclusive custody as the only federally chartered US digital asset bank
- Overcollateralized loans at 60% LTV with margin calls triggered at 70%
- Arch maintains $100M Lloyd's of London insurance and licenses across 44 US states
The Celsius Lesson
When Celsius Network filed for bankruptcy in July 2022, it exposed a critical vulnerability in how crypto lending platforms managed customer assets. Celsius rehypothecated customer deposits by lending them out again, staking them, or using them as collateral for the firm's own trades. That practice cascaded into catastrophic losses.
Arch Lending took the opposite path. The firm's answer is blunt: a strict zero-rehypothecation policy where client collateral is never lent, staked, or otherwise redeployed. This structural choice separates the entity making loans from the entity holding the assets.
Custody and Overcollateralization
Custody is handled exclusively through Anchorage Digital, which holds the distinction of being the only federally chartered digital asset bank in the US. That charter was granted in January 2021 by the Office of the Comptroller of the Currency. By parking collateral with a regulated national trust bank rather than keeping it on its own books, Arch creates structural separation that prevents the kind of commingling that toppled competitors.
Arch's lending model is overcollateralized, operating at an initial loan-to-value ratio of up to 60%. When Bitcoin's price drops enough to push the LTV to around 70%, margin calls kick in. This buffer protects both borrower and lender from sudden liquidations.
Regulatory Footprint and Insurance
Arch operates under NMLS registration #2637200 and holds lending licenses across 44 US states. The firm also carries a $100 million insurance policy through Lloyd's of London. These layers—federal custody, state licensing, insurance coverage, and strict collateral policies—reflect a deliberate shift toward regulated, cautious lending models in digital finance.
The post-Celsius era has reshaped what crypto lending means. It's no longer about maximizing yield through complex asset redeployment. It's about proving you can hold customer funds without touching them.
