Lombard has partnered with Bitwise Asset Management to introduce Bitcoin yield and lending services that allow institutions to generate returns and borrow against holdings without moving assets from custody. The announcement was made at the Digital Asset Summit, where Lombard CEO Jacob Phillips outlined the platform’s institutional focus.
The initiative introduces Bitcoin Smart Accounts, designed to connect institutional custody systems with onchain finance. Bitwise will structure yield strategies combining decentralized finance lending and tokenized real-world assets, while Morpho will provide the lending infrastructure.
Bitcoin Smart Accounts Reduce Custody and Counterparty Risks
The platform uses Bitcoin native tools such as partially signed transactions and timelocks to verify collateral ownership. This allows institutions to represent lending positions onchain without transferring or rehypothecating underlying Bitcoin.
According to Lombard estimates, approximately $500 billion worth of Bitcoin is currently held in institutional custody, with limited mechanisms to generate yield while maintaining security controls. The new structure aims to unlock liquidity without exposing institutions to bridge or counterparty risks that have historically limited participation.
Bitcoin DeFi Growth Driven by Vaults and Institutional Tools
Momentum in Bitcoin-based decentralized finance continues to build. Data shows Bitcoin’s total value locked in DeFi stands near $2.93 billion, compared with an overall market capitalization of about $1.4 trillion.
Recent developments include integrations by Telegram, which introduced yield-generating vaults in its crypto wallet, and hardware wallet firm Ledger, which partnered with Babylon Protocol to enable Bitcoin deployment while maintaining self-custody.
At present, Babylon Protocol leads Bitcoin-based DeFi with approximately $2.8 billion in total value locked, while Lombard follows with about $744 million, signaling increasing institutional interest in turning Bitcoin into a productive financial asset.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.