Tokenized gold is becoming productive collateral in crypto lending, Arch says

Tokenized gold has moved deeper into crypto lending after Aave’s XAUT-backed debt reached a $25 million ceiling and Arch Lending added loans against the two largest gold tokens. Summary Aave’s $25 million XAUT debt ceiling was fully used before additional capacity filled within 24 hours. Arch’s Himanshu Sahay said investors increasingly want to use tokenized gold instead of passively holding it. Arch now accepts PAXG and XAUT as collateral for loans at up to 75% LTV. Borrowers retain their gold exposure but face interest, liquidation, custody, and issuer risks. Arch co-founder and chief technology officer Himanshu Sahay told crypto.news that demand for tokenized gold loans shows holders are beginning to treat the assets as usable parts of the digital financial system, rather than only as a way to track bullion prices. “The most interesting thing about the demand we’re seeing around tokenized gold is that people aren’t just treating these assets as a way to get exposure to the price of gold. They’re increasingly looking at them as something that can be put to work within the broader crypto financial system.” Demand recorded on Aave provides one example. In late January, the decentra...