According to Odaily Odaily, Lombard and Bitwise Asset Management announced a collaboration at the Digital Asset Summit in New York, offering institutions a solution for earning returns and collateralized BTC lending without removing their assets from custody, targeting the size of BTC assets held by institutions.
Bitwise will develop yield strategies that combine DeFi lending with tokenized real-world assets, and the decentralized lending protocol Morpho will provide infrastructure for BTC-collateralized lending.
The platform uses Bitcoin-native tools such as partially signed transactions and time locks to verify collateral, allowing positions to be represented on-chain without transferring or re-staking the underlying assets. Phillips stated that Bitcoin Smart Accounts can simultaneously reduce custody, cross-chain bridge, and counterparty risks.
The program targets high-net-worth individuals, asset management institutions, and corporate treasuries, and is planned for launch in the second quarter of 2026, with plans to add more custodians and protocols to expand coverage. Lombard estimates approximately $500 billion of BTC is held in institutional custody; DefiLlama data shows that the total value locked (TVL) of BTC in DeFi is approximately $2.93 billion, with a market capitalization of approximately $1.4 trillion; as of press time, Babylon Protocol's total TVL is approximately $2.8 billion, and Lombard's is approximately $744 million. (Cointelegraph)
