Lombard taps Bitwise to offer Bitcoin yield and lending to institutional custody

Lombard, a institution gathering Bitcoin-based lending infrastructure, volition squad with Bitwise Asset Management to alteration institutions to gain output and get against Bitcoin (BTC) without moving assets retired of custody, aiming to unlock hundreds of billions of dollars successful Bitcoin held successful organization custody.

The concern was announced Tuesday astatine the Digital Asset Summit successful New York. 

Jacob Phillips, CEO and co-founder of Lombard, told Cointelegraph: 

The breakthrough is Bitcoin Smart Accounts—connecting 2 antecedently isolated worlds: organization custody and onchain finance.

According to an announcement shared with Cointelegraph, Bitwise volition make output strategies combining DeFi lending with tokenized real-world assets, portion Morpho, a decentralized lending protocol, volition supply the lending infrastructure for borrowing against Bitcoin.

The level uses Bitcoin-native tools specified arsenic partially signed transactions and timelocks to verify collateral, allowing positions to beryllium represented onchain without transferring oregon rehypothecating the underlying assets.

Rather than relying connected bridges oregon wrapped assets, Phillips said “Bitcoin Smart Accounts destruct each 3 hazard vectors simultaneously,” addressing custody, span and counterparty risks that person historically constricted organization Bitcoin lending.

The offering targets high-net-worth individuals, plus managers and firm treasuries seeking to enactment long-held Bitcoin positions to enactment without changing custody arrangements.

The rollout is expected successful the 2nd 4th of 2026, with Lombard readying to adhd much custodians and protocols to grow entree crossed organization Bitcoin holdings.

Phillips said the exemplary could alteration however institutions attack Bitcoin allocations:

We're moving Bitcoin from a axenic store of worth to productive organization capital. That's the shift.

That’s due to the fact that Bitcoin successful organization portfolios has historically functioned arsenic a passive store of value, helium said, with constricted options to make output oregon entree liquidity without exiting custody, taking connected counterparty hazard oregon triggering taxable events.

Lombard estimates that $500 cardinal worthy of the biggest crypto is held successful organization custody, overmuch of which remains extracurricular onchain fiscal markets.

Related: Sygnum Bank bets connected Bitcoin lending with multisignature custody model

Bitcoin DeFi gains traction arsenic vaults and lending expand

Data from DefiLlama shows Bitcoin’s full worth locked successful DeFi astatine astir $2.93 billion, a tiny fraction of its astir $1.4 trillion marketplace capitalization. However, momentum is opening to physique arsenic efforts to crook Bitcoin into a yield-generating plus summation traction.

Bitcoin successful DeFi. Source: Defillama

One cardinal operator is the emergence of onchain vaults, which relation similar automated concern funds that deploy idiosyncratic superior crossed DeFi strategies. In January, Bitwise announced a tie-up with DeFi lending protocol Morpho to motorboat non-custodial vaults designed to make output done overcollateralized lending.

The inclination has accelerated successful caller months. In February, Telegram added yield-generating vaults to its built-in crypto wallet, allowing users to gain returns connected Bitcoin, Ether and USDT wrong the app.

In March, Bitcoin staking protocol Babylon integrated with hardware wallet shaper Ledger, enabling users to deploy BTC successful fiscal applications portion maintaining self-custody done hardware-based transaction signing.

At the clip of writing, Babylon Protocol leads Bitcoin-based DeFi with astir $2.8 cardinal successful full worth locked, portion Lombard ranks 2nd with astir $744 million.

Magazine: Banks privation to tally Vietnam’s crypto exchanges, Boyaa’s $70M BTC plan: Asia Express