Lombard, a firm building Bitcoin-native lending infrastructure, has partnered with Bitwise Asset Management to let institutions earn yield and borrow against Bitcoin without moving custody. Announced at the Digital Asset Summit in New York, the collaboration aims to unlock a large portion of the hundreds of billions of dollars now held in institutional custody.
At the center of the offering are Bitcoin Smart Accounts, Lombard’s mechanism for linking institutional custody systems to onchain financial services. Bitwise will craft yield strategies that blend decentralized finance (DeFi) lending with tokenized real-world assets, while Morpho — a decentralized lending protocol — will provide the borrowing rails.
Lombard’s approach relies on Bitcoin-native building blocks such as partially signed transactions and timelocks to prove collateral and to mirror positions onchain without transferring or rehypothecating the underlying coins. By avoiding wrapped tokens and external bridges, Lombard says this model reduces custody, bridge and counterparty risks that have historically limited institutional participation in Bitcoin lending.
The service is aimed at high-net-worth individuals, asset managers and corporate treasuries that want to generate returns or access liquidity from long-held Bitcoin without changing custodianship. Lombard plans to begin rolling out the product in the second quarter of 2026 and to add more custodial partners and protocol integrations over time.
Jacob Phillips, Lombard’s CEO and co-founder, described the initiative as a way to transform Bitcoin’s institutional role from a passive store of value into productive capital. Lombard estimates roughly $500 billion of Bitcoin is held in institutional custody today, largely excluded from onchain financial channels.
Context: Bitcoin DeFi remains small relative to Bitcoin’s market cap but is growing. DefiLlama data shows roughly $2.93 billion in Bitcoin total value locked (TVL), a small share of an approximately $1.4 trillion market. Onchain vaults — automated pools that deploy capital across DeFi strategies — are an important growth vector. In January, Bitwise and Morpho announced non-custodial vaults intended to generate yield through overcollateralized lending.
Other recent moves include Telegram adding yield-generating vaults to its wallet in February for Bitcoin, Ether and USDT, and Babylon integrating with hardware wallet maker Ledger in March so users can deploy BTC into financial apps while retaining self-custody via hardware signing. At the time of reporting, Babylon Protocol led Bitcoin-based DeFi with about $2.8 billion in TVL, and Lombard ranked second at roughly $744 million.
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