Svmuu News Lombard and Bitwise Asset Management announced a partnership at the Digital Asset Summit in New York, aiming to provide institutions with solutions to earn yield and borrow against BTC as collateral without moving assets out of custody. The initiative targets the scale of BTC assets held under institutional custody.
Bitwise will develop yield strategies that combine DeFi lending with tokenized real-world assets. The decentralized lending protocol Morpho will provide the infrastructure for BTC-backed loans.
The platform utilizes native Bitcoin tools such as Partially Signed Bitcoin Transactions (PSBTs) and timelocks to verify collateral, enabling positions to be represented on-chain without transferring or restaking the underlying assets. Phillips stated that Bitcoin Smart Accounts can simultaneously reduce custody, cross-chain bridge, and counterparty risks.
The solution targets high-net-worth individuals, asset management firms, and corporate treasuries. It is scheduled to launch in Q2 2026, with plans to add more custodians and protocols to expand coverage. Lombard estimates that approximately $500 billion worth of BTC is held in institutional custody. DefiLlama data shows that the total value locked (TVL) of BTC in DeFi is around $2.93 billion, with a market cap of approximately $1.4 trillion. As of press time, Babylon Protocol's TVL is about $2.8 billion, while Lombard's is around $744 million. (Cointelegraph)