Arch Lending CTO Sets Three Rules for Bitcoin Loan Safety

Himanshu Sahay, the co founder and CTO at Arch Lending, says the crypto lending industry needs to get serious about security. He points to three specific safeguards that are essential for anyone borrowing against their Bitcoin holdings. These rules aim to protect investors from the kind of platform collapses we have seen in previous market cycles.

The first pillar is qualified custody. Sahay argues that assets should be held by regulated, professional institutions rather than left on a platform balance sheet. This ensures that a third party is legally responsible for holding the collateral safely.

Next, he calls for a total ban on rehypothecation. This practice allows lenders to use a borrower's collateral for their own purposes, which creates massive risk if the platform makes a bad bet. By prohibiting this, lenders ensure the borrower's Bitcoin remains exactly where it belongs.

Finally, Sahay emphasizes the need for clear and rigid collateral rules. When the market turns volatile, there should be no guesswork regarding liquidation processes. Traders should watch how platforms adopt these standards to see which lenders truly prioritize user security over short term gains.