At three September corporate Bitcoin events — Bitcoin Corporate Day in London, the Midwest Bitcoin Summit in Columbus, and the Bitcoin Treasuries Conference in New York — Arch Lending’s announcement said Himanshu Sahay, co-founder and CRO, pressed institutional and individual holders on whether they should sell bitcoin or borrow against it when liquidity is needed. The answer, he argued, depends less on the headline rate than on what sits underneath the loan.
Four questions before a term sheet
Speaking on September 22 at Bitcoin Corporate Day in London, an invite-only forum for corporates, funds and financial institutions, Sahay said borrowers should not anchor the decision to the advertised rate. Instead, he argued, they should ask four questions before signing any Bitcoin-backed loan term sheet.
Who holds the keys to the collateral? Can the collateral be rehypothecated or reused? What exactly triggers a liquidation, and is it partial or total? What happens to Bitcoin if the lender fails? The first two questions address control and reuse; the latter two address liquidation and insolvency risk.
The questions reflect lessons from earlier Bitcoin lending failures, where unclear collateral controls and broad rehypothecation rights created cascading risks. Sahay’s framework treats those issues as due diligence items rather than fine print.
Liquidity without liquidation
Two days later, Sahay delivered a keynote at the Midwest Bitcoin Summit in Columbus, Ohio, titled Liquidity Without Liquidation. His pitch centered on long-term holders who do not want to sell bitcoin but may need cash for a home or a business.
At the Bitcoin Treasuries Conference in New York, Sahay made a similar case to treasury managers and institutions, linking lending choices to balance-sheet resilience. The events collectively targeted corporate treasurers, funds, and individual holders who already carry Bitcoin exposure.
Borrowing can preserve the position, Sahay said, as long as holders understand where their collateral sits and whether it can be reused. The message is less a pitch for leverage than a call for lender transparency.
Sahay also stressed that liquidation design can determine whether a borrower keeps exposure or is forced out at the worst time. A partial liquidation may be less punitive than a total liquidation, but borrowers need that distinction disclosed before volatility arrives.
Why the market backdrop matters
Bitcoin-backed lending is developing alongside other collateralized Bitcoin infrastructure. The planned Tether-Backed Utexo to Launch USDT on Bitcoin This Month is another attempt to issue against Bitcoin-based systems.
Trading venues are also adding Bitcoin-denominated pairs, such as Upbit to List POD Trading Pairs Against KRW, BTC and USDT, but deeper trading liquidity does not eliminate counterparty risk in lending.
Institutional sentiment can shift quickly, and the US Bitcoin Spot ETFs Record $149 Million Net Outflow on September 30 showed how large flows can reverse within a single session. That makes collateral disclosure even more important for lenders and borrowers.
These innovations arrive at a time when institutions are still evaluating how Bitcoin collateral should be treated in credit relationships, making Sahay’s checklist relevant beyond retail borrowers.
If more borrowers adopt Sahay’s four questions, lenders may need to publish clearer answers about custody, reuse rights, liquidation mechanics, and insolvency treatment. That would be a meaningful step toward more standardized Bitcoin collateral markets.
