TL;DR - Arch Lending raised $75M, got Galaxy to back a tokenized CLO on Avalanche that can scale to $200M, and quietly assembled a product lineup that goes way beyond basic crypto loans. They don't rehypothecate. Custody sits with a federally chartered bank. If you were burned by Celsius, this is the pitch designed to win you back.
Who Is Arch Lending
Arch is a crypto-backed lender run by ChainFi, Inc out of New York. Dhruv Patel and Himanshu Sahay started it in 2022. Before this, they were at Bridgewater, Snapchat, Brex, and Google - not exactly your typical DeFi degen founding team. They're NMLS licensed (#2637200) and regulated in the U.S., which already puts them in a different category than most of the lending platforms that blew up three years ago.
Here's the basic deal: you put up BTC, ETH, or SOL as collateral and borrow USD or USDC against it. No selling your stack. LTV goes up to 60%, rates start at 8.49% APR, and you can lock in terms for up to 24 months. No early repayment fees. No credit check. Money hits fast.
The thing that actually matters, though, is what happens to your collateral after you hand it over. Arch parks everything with Anchorage Digital - that's a U.S. federally chartered bank - in segregated cold storage. They carry $250M in insurance. And they don't lend out your coins behind your back. No rehypothecation, period. That's the whole sales pitch, and honestly? After Celsius, BlockFi, and Voyager, it's a pretty compelling one.
Follow the Money
The funding tells you a lot about where this is headed. Arch started small - $2.75M in 2023 just to get the lending product off the ground. Then 2024 got serious: a $5M equity seed from Morgan Creek Digital and Castle Island Ventures, plus a $70M debt facility from Galaxy Ventures. That's $75M total.
But the January 2026 move is the one worth paying attention to. Galaxy closed what they're calling Galaxy CLO 2025-1 - a $75M tokenized collateralized loan obligation built on Avalanche, specifically to fund Arch's loan book. It can scale to $200M. The anchor? A $50M allocation from Grove, the credit arm of the Sky ecosystem (the thing formerly known as MakerDAO).
The CLO pays a senior coupon at SOFR +570 bps, matures December 2026, and distributes monthly. INX tokenized the debt tranches and plans to list them on its ATS for qualified investors. So you've got old-school structured credit packaging - think Wall Street CLO desks - except the underlying loans are backed by Bitcoin and the whole thing lives on-chain. It's weird and new and probably the future.
| Round | Amount | Partners |
|---|---|---|
| Seed (2023) | $2.75M | Early investors |
| Equity Seed (2024) | $5M | Morgan Creek Digital, Castle Island Ventures |
| Debt Facility (2024) | $70M | Galaxy Ventures |
| Tokenized CLO (Jan 2026) | $75M (up to $200M) | Galaxy Digital, Grove (Sky/MakerDAO) |
Beyond Basic Lending
Arch isn't just doing vanilla loans anymore. They've been stacking products.
Perpetual Income is a collab with Mark Moss. The idea: Bitcoin holders borrow against their BTC to generate recurring cash flow without triggering a taxable event. You keep your coins, you get income, and the IRS doesn't get a cut on the way out. At least, that's the pitch.
TaxShield takes it further. You post BTC as collateral, take the loan, buy mining rigs through Blockware, and deduct the full equipment purchase in year one using IRS Section 168(k) bonus depreciation. So you're potentially writing off hundreds of thousands in taxes while stacking sats from mining rewards every month. It's aggressive, but it's legal.
They've also spun up a standalone custody product through BitGo - bank-grade security, insurance, plus trading and staking access from cold storage. Basically trying to be a one-stop shop for people who hold serious crypto bags.
Who They're Working With
Galaxy is the big one - equity, debt, and now the tokenized CLO. They're all-in on Arch as their lending distribution play.
Onramp came on in February 2025 to push Bitcoin-backed lending into Asia-Pacific institutional markets. Two-year fixed terms, up to 50% LTV, and a bankruptcy-remote trust structure. That last part matters - it means if Arch goes under, borrower collateral sits in a legally separate entity.
The Luxor Technology partnership from October 2025 is interesting because it connects lending directly to Bitcoin mining. Miners take BTC-collateralized loans from Arch to finance operations, then roll into Luxor's derivatives suite to hedge their hashrate exposure. Public miners avoid diluting shareholders. Private miners get institutional-grade financing they couldn't access through traditional banks. It's a clean pipeline.
BitcoinTreasuries.net rounds it out on the institutional lending side.
The So What
Look, crypto lending has a trust problem. Celsius took $4.7 billion in customer funds down with it. BlockFi's bankruptcy left thousands of creditors fighting over scraps. Voyager was even messier. The common thread? Rehypothecation, opaque risk management, and custody that turned out to be a suggestion rather than a guarantee.
Arch built the opposite of all that. Overcollateralized only. Collateral held by a federally chartered bank. No lending out customer assets. U.S. regulated. And now they've got $200M in CLO capacity from Galaxy to actually scale the thing.
Whether the market is ready to trust a crypto lender again is still an open question. But if anyone's going to make the case, it's probably the team that raised $75M specifically by promising they won't do any of the stuff that got the last batch killed.
NOT INVESTMENT ADVICE. This article discusses crypto-backed lending platforms and structured finance products. Nothing here is a recommendation to borrow, lend, or deposit funds on any platform. Crypto-backed loans carry real liquidation risk. Do your own research.
Sean Ristau | @SeanRistau | 21Rates / The Daily Stack