Lombard Partners with Bitwise to Activate $500 Billion in Institutional Custody BTC for Yields and Collateralized Lending

Goldfinch reports that on March 25, Lombard and Bitwise Asset Management announced a partnership at the New York Digital Asset Summit. The collaboration offers institutions a way to earn yields and lend BTC through collateralized borrowing without leaving custody, targeting the scale of institutionally managed BTC assets.
Bitwise will develop yield strategies that combine DeFi lending with tokenized real-world assets, while the decentralized lending protocol Morpho will provide infrastructure for BTC collateralized loans. The platform uses native Bitcoin tools like partial signature transactions and time locks to verify collateral, allowing positions to be represented on-chain without transferring or re-pledging the underlying assets.
Phillips stated that Bitcoin Smart Accounts can simultaneously reduce custody, cross-chain bridge, and counterparty risks. This solution is aimed at high-net-worth individuals, asset management firms, and corporate treasuries, with plans to launch in Q2 2026 and expand coverage by adding more custodians and protocols.
Lombard estimates approximately $500 billion in BTC is under institutional custody; according to DeFiLlama, the total locked value of BTC in DeFi is about $2.93 billion, with a market cap of roughly $1.4 trillion; as of press time, Babylon Protocol’s total locked value is about $2.8 billion, and Lombard’s is approximately $744 million.