Lombard and Bitwise Partner to Enable Bitcoin Lending Without Leaving Custody
Highlights:
- Lombard and Bitwise have partnered to help institutions earn yield on Bitcoin without moving assets out of custody.
- Institutions can borrow stablecoins against Bitcoin while keeping full control of their holdings.
- Bitcoin Smart Accounts reduce risks by removing custody changes and opaque lending terms.
Lombard has partnered with Bitwise Asset Management to help institutions use Bitcoin without moving it out of custody. The firms shared the update during the Digital Asset Summit in New York. The product will allow institutions to earn yield and access liquidity while keeping existing custody structures unchanged. The rollout is planned for the second quarter of this year.
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✦ Lombard partners with Bitwise to facilitate Bitcoin $BTC lending and yield opportunities for institutional investors:
Lombard's CEO Jacob Phillips revealed at the Digital Asset Summit that the firm is set to provide institutional clients with the ability to earn yield and…
— ZoneCrypto (@_ZoneCrypto_) March 24, 2026
An estimated $500 billion in Bitcoin sits in institutional custody without active use. Many firms hold Bitcoin as a reserve asset but avoid deploying it. They often face operational limits and risk concerns when they try to use it. As a result, most of this capital remains inactive.
Institutions usually face difficult trade-offs when they seek liquidity. Some exit custody, which removes insurance protections and introduces new technical risks. Others rely on OTC lenders, where pricing lacks clarity and settlement can take time. Some firms sell Bitcoin, which triggers taxes and reduces long-term exposure.
Lombard built its model to remove these constraints. The company allows institutions to use Bitcoin while keeping custody unchanged. This approach keeps existing security, insurance, and compliance frameworks in place. It also avoids changes to how institutions currently manage their assets.
Lombard And Bitwise Partner To Connect Custody With Onchain Access
Bitcoin Smart Accounts sit at the center of this structure. These accounts allow institutions to use Bitcoin as collateral without transferring it. The system recognizes Bitcoin held in custody and links it to onchain activity. At the same time, institutions retain full control of their assets.
The platform uses simple Bitcoin-native tools to confirm collateral positions. It relies on partially signed Bitcoin transactions and timelocks to verify ownership. These tools allow the system to track collateral without moving Bitcoin. This design keeps the process aligned with existing custody setups.
.@Bitwise Asset Management joins Lombard's Bitcoin Smart Accounts as a strategic yield partner.
The global crypto asset manager with $15B+ AUM and 40+ investment products is developing scalable Bitcoin yield strategies for the estimated $500B in institutionally custodied BTC. pic.twitter.com/6HUAJP9YIZ
— Lombard (@Lombard_Finance) March 24, 2026
Bitwise will handle the yield side of the platform. The firm will combine DeFi lending with selected real-world asset exposure. This approach aims to generate returns while keeping risk under control. It also reflects demand from institutions that want structured strategies.
Morpho will support borrowing activity within the system. Institutions will borrow stablecoins against Bitcoin positions through the protocol. This setup allows them to access liquidity without selling Bitcoin. It also removes the need to move funds across different platforms.
Institutional Bitcoin Moves Toward Productive Onchain Capital Systems
Bitcoin activity in decentralized finance still represents a small share of the total market. However, the recent developments show steady progress. More platforms now support ways to use Bitcoin without giving up custody.
Bitwise has already worked with Morpho to launch lending vaults earlier this year. These vaults allow users to earn yield through overcollateralized lending. At the same time, Telegram added yield features to its wallet for Bitcoin and other assets. These updates show growing interest in practical Bitcoin use cases.
Babylon has also increased its operations in the space. The protocol collaborated with hardware wallet providers to facilitate safe participation. Users are now able to interact with Bitcoin-based finance with offline private keys. Lombard intends to expand its platform once it is launched. The company will include additional custodians and approved protocols in due course. Each addition will enhance access among institutions and expand the liquidity options within the system.
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Austin Mwendia
Austin Mwendia is a passionate crypto journalist with three years of experience. He has contributed to various media outlets, covering blockchain technology, market analysis, and financial trends. He is committed to educating readers and expanding the adoption of blockchain and decentralized finance.
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