Fintech Firm Arch Starts Crypto Lending Product, Raises $2.75M

Arch, a financial technology company targeting alternative asset investors, announced its first product on Wednesday.

The firm added it closed a $2.75 million funding round in the second half of last year. The capital will help expand the team and financial partnerships. Arch will also lend out some of the funds, co-founder and CEO Dhruv Patel told CoinDesk during an interview.

Founded in February 2022, New York-based Arch’s platform allows users to take out a single loan collateralized across combined alternative assets – starting with cryptocurrencies. The loans are custodied by BitGo and denominated in either U.S. dollars or USD coin (USDC) stablecoins (and can be repaid in any combination of the two).

"Arch doesn’t touch or reloan customer funds for any reason, "said Patel – an important distinction after liquidity issues took down crypto lenders BlockFi, Celsius Network and CoinDesk's sister company Genesis Global Trading.

The target customers for Arch are higher income or asset individuals who invest heavily in alternative assets who might feel discouraged by traditional lenders and financial institutions, explained Patel.

“Today, nearly 50% of young investors hold cryptocurrency, and over 80% have stated they are interested in investing in alternative assets,” said Patel. “With Arch, individuals can use crypto assets as collateral for loans, granting the ability to access capital to make other investments or make other large purchases to accelerate their financial journeys.”

Arch will also use the funding to continue adding regulatory approvals, which come with steep legal costs. The startup is currently legal to operate in 31 states, said co-founder and Chief Technology Officer Himanshu Sahay. Investors in Arch included Tribe Capital, Castle Island Ventures, Picus Capital and Global Founders Capital, among others.

Arch is starting with crypto but plans to eventually expand to use public stocks, equity investments in pre-initial public offering (IPO) companies and real estate so that borrowers can use a diverse portfolio of assets as collateral. The startup is also considering other types of financial technology such as cash management software

Read more: Why Do Crypto Lenders Keep Blowing Up?