Lombard partners with Bitwise to activate $500 billion in institutionally held BTC for yield and collateralized lending.

Lombard and Bitwise Asset Management announced a collaboration at the Digital Asset Summit in New York, offering institutions a solution for earning yield and collateralized BTC lending without removing assets from custody, targeting the scale of BTC assets held in institutional custody. Bitwise will develop yield strategies combining DeFi lending with tokenized real-world assets, while the decentralized lending protocol Morpho will provide the 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-collateralizing the underlying assets. Phillips stated that Bitcoin Smart Accounts can simultaneously reduce custody, cross-chain bridge, and counterparty risks. Targeting high-net-worth individuals, asset management firms, and corporate treasuries, the solution is planned for launch in the second quarter of 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 in 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 value locked is approximately $2.8 billion, and Lombard's is approximately $744 million. (Cointelegraph)