Lombard, Bitwise Partner to Open Bitcoin Product Without Security Transfer
Lombard, a company that builds a Bitcoin-based lending infrastructure, has teamed up with Bitwise Asset Management to allow institutions to get products without moving assets from jail and to make loans in Bitcoin (BTC), aiming to unlock hundreds of billions of dollars in Bitcoin under institutional control.
The partnership was announced Tuesday at the Digital Asset Summit in New York.
Lombard CEO and founder Jacob Phillips told Cointelegraph:
The breakthrough is Bitcoin Smart Accounts – connecting two previously separate worlds: institutional security and onchain finance.
According to an announcement shared with Cointelegraph, Bitwise will develop product strategies by combining DeFi lending with real-world assets, while Morpho, a decentralized lending protocol, will provide a lending infrastructure for lending with Bitcoin.
The platform uses Bitcoin's native tools, such as partially signed transactions and timestamps, to ensure security, allowing positions to be represented onchain without transferring and revaluing underlying assets.
Instead of relying on bridges or wrapped assets, Phillips said, “Bitcoin smart accounts eliminate all three risk vectors at once,” the historically limited institutional Bitcoin loans have protection, bridge and counterparty risks.
The offering is aimed at high-net-worth individuals, asset managers and corporate treasuries looking to hold long-term bitcoin positions without changing custody arrangements.
With its release expected in the second quarter of 2026, Lombard plans to add additional custodians and protocols to expand access to institutional Bitcoin holdings.
Phillips said the model could change how institutions handle Bitcoin allocations.
We are moving Bitcoin from a pure store of value to productive institutional capital. That's the shift.
This is because Bitcoin has historically functioned as a store of value in institutional portfolios, with limited options for generating yield or obtaining liquidity without exiting the portfolio, triggering counterparty risk or taxable events, he said.
Lombard estimates that $500 billion of the largest crypto is under institutional control, most of which remains outside of onchain financial markets.
Related: Signum Bank Bets on Bitcoin Lending with Multi-Signature Custodial Model
Bitcoin DeFi will gain traction as treasury and credit expand
Data from Defillama shows that Bitcoin's total value is around $2.93 billion locked in DeFi, a small fraction of its $1.4 trillion market capitalization. However, momentum is starting to build in efforts to turn Bitcoin into a yield-generating asset.
One key driver is the rise of onchain vaults that act as automated investment funds that deploy user capital in DeFi strategies. In January, Bitwise announced a tie-up with DeFi lending protocol Morpho.
The trend has increased in recent months. In February, Telegram added Productive Vaults to its built-in crypto wallet, allowing users to earn returns in Bitcoin, Ether, and USDT within the app.
In March, Bitcoin staking protocol Babylon integrated with hardware wallet maker Ledger, allowing users to deploy BTC in self-sustaining financial applications through hardware-based transaction signatures.
At the time of writing, Babylon Protocol leads Bitcoin-based DeFi with a total value of around $2.8 billion, with Lombard in second place at around $744 million.
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