Lombard is preparing to launch a new product aimed at unlocking billions of dollars in idle institutional Bitcoin. The company’s upcoming Bitcoin Smart Accounts will allow institutions to use custodied Bitcoin as onchain collateral—without moving the assets or transferring control to a third party.
The initiative is designed to bridge traditional institutional custody with decentralized finance (DeFi), making it easier for asset managers, corporate treasuries and other large holders to generate liquidity from their Bitcoin holdings while maintaining security and legal ownership.
How Lombard’s Bitcoin Smart Accounts Work
According to the company, the product will recognize Bitcoin held in qualified institutional custody through an onchain receipt token called BTC.b. This token represents the custodied Bitcoin and enables institutions to access lending markets and liquidity venues onchain—without physically moving the underlying BTC.
This approach addresses one of the biggest barriers for institutions entering DeFi: custody risk. Traditionally, putting Bitcoin to work onchain required wrapping it or transferring it to centralized platforms, which often meant relinquishing control. Lombard’s framework aims to eliminate that trade-off.
The company says pilots are already underway with select institutional clients, although specific names and transaction volumes have not been disclosed. A broader launch is expected this quarter.
Morpho, a decentralized lending protocol known for its institutional-focused infrastructure, will serve as Lombard’s initial liquidity partner. The integration will support isolated Bitcoin-backed lending, and Lombard has indicated that additional DeFi protocols and custodians will be added over time.
Lombard co-founder Jacob Phillips highlighted the scale of the opportunity, noting that roughly $1.4 trillion in Bitcoin remains idle, with only about $40 billion currently active in DeFi. As decentralized exchanges now account for a significant share of crypto trading and nearly half of lending and borrowing occurs onchain, Bitcoin has largely remained underutilized compared to proof-of-stake assets that natively generate yield.
Growing Institutional Demand to Put Idle Bitcoin to Work
Lombard’s move comes amid increasing efforts across the crypto industry to unlock yield opportunities for institutional Bitcoin holders.
In May, Coinbase launched the Coinbase Bitcoin Yield Fund, targeting non-US institutional investors and offering expected annual net returns between 4% and 8% on Bitcoin holdings.
Similarly, Solv Protocol introduced a structured yield vault called BTC+, designed to deploy idle Bitcoin across multiple strategies spanning decentralized finance, centralized finance and traditional markets. These strategies include protocol staking, basis arbitrage and exposure to tokenized real-world assets.
Institutional infrastructure provider Fireblocks has also integrated Stacks, enabling clients to access Bitcoin-based lending and yield solutions directly within their custody framework.
Founded in 2024, Lombard focuses on building Bitcoin-native onchain infrastructure and tokenized assets such as LBTC and BTC.b. With Bitcoin Smart Accounts, the company aims to create open infrastructure that connects institutional custody to decentralized financial markets—without compromising security or compliance.
