Lombard to Launch Bitcoin Smart Accounts for Institutions
Lombard said it plans to launch Bitcoin Smart Accounts, designed to serve as onchain collateral for institutionally held bitcoin without moving assets or transferring control to a third party.
According to an announcement shared with Cointelegraph, following its launch this quarter, the reserved Bitcoin will be recognized on-chain by the receipt token BTC.b, which will allow institutions to access credit and financing facilities with legal ownership and existing security arrangements.
The Lombard framework is aimed at asset managers, corporate treasuries and others who have Bitcoin (BTC) idle and left in proper custody. Pilots are underway with select institutional clients, although Lombard did not disclose client names or transaction volumes.
Bitcoin does not offer production, a limitation that has kept a large amount of the token idle compared to proof-of-stake networks. That dynamic will begin to change as a growing set of protocols seek to make custodial Bitcoin work on-chain.
Looking to withdraw Bitcoin
Lombard co-founder Jacob Phillips told Cointelegraph that decentralized exchanges now account for a meaningful share of crypto trading activity, with more than half of lending and borrowing already taking place onchain. Phillips said:
But Bitcoin is stuck. You have roughly $1.4 trillion sitting idle in BTC, with only $40 billion active in DeFi. Until now, if you wanted to make your Bitcoin work on-chain, you had to package it up or move it to centralized services, which meant giving up the protections institutional owners require. That's the problem we're solving.
Additional onchain protocols and custodian integrations are expected over time.
Phillips said Morpho was chosen for its institutional-focused lending infrastructure and its experience supporting standalone Bitcoin-backed lending, and Bitcoin Smart Accounts are designed as an open infrastructure rather than a closed integration, allowing Lombard to support additional DeFi protocols when the need arises.
In the year Founded in 2024, Lombard will develop a Bitcoin-focused onchain infrastructure and assets, including LBTC and BTC.b, designed to allow Bitcoin to be used in DeFi without leaving custody, the company said.
Related: Bitwise onchain vaults to launch via Morpho
New products aim to put idle bitcoins to work.
On May 1, US-based crypto exchange Coinbase launched the Coinbase Bitcoin Product Fund, targeting non-US institutional investors with an expected annual net return of 4% to 8% on their Bitcoin holdings.
A few months later, the Solov Protocol launched a structured profit repository for institutional investors designed to deploy idle Bitcoin across multiple profit mechanisms, including decentralized finance, centralized finance, and traditional markets. Solv's BTC+ Vault includes mechanisms such as protocol stacking, base arbitration and exposure to real-world assets.
On February 4, institutional crypto infrastructure provider FireBlocks said it would integrate Stax to provide institutional clients with access to Bitcoin-based loans and products.
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