TL;DR
- LBTC’s yield source is changing. Lombard is moving LBTC from Bitcoin staking to an institutional covered-call strategy managed by Bitwise Asset Management, targeting 2.5% net APY in Bitcoin terms.
- We provide qualified custody for the strategy. We hold Bitcoin backing the strategy in segregated, bankruptcy-remote accounts as one of its qualified custodians, under tri-party agreements that keep the Bitcoin within qualified custody throughout.
- We’re also an execution venue. Bitwise trades the options underlying the strategy on our platform, reflecting our role across both custody and execution for institutional Bitcoin.
- Bitcoin is becoming productive collateral. Alongside our work with Bitwise, Upshift, and Centrifuge, this extends our approach of custody as the entry point, with execution, financing, and yield built on top.
Lombard has spent the past two years bringing Bitcoin onchain at scale, and LBTC is now moving its yield source from Bitcoin staking to an institutional covered-call strategy managed by Bitwise Asset Management, targeting 2.5% net APY in Bitcoin terms.
We are supporting that transition directly. Bitcoin backing the strategy is held in segregated, bankruptcy-remote accounts at qualified custodians including Kraken, under tri-party agreements that keep the Bitcoin within qualified custody throughout. Kraken also serves as one of the execution venues where Bitwise trades the options underlying the strategy.
Bitcoin as productive collateral
Institutions are increasingly evaluating platforms not just on where they can trade, but on what their assets can do while held there. Bitcoin is at the center of that shift, moving from a passive store of value toward productive collateral, and institutions expect the infrastructure underneath it to reflect that: custody, execution, and yield working together, rather than split across separate providers and counterparties.
Gurpreet Oberoi, Head of Kraken Institutional: “Bitcoin backing this strategy is held in segregated, bankruptcy-remote accounts at qualified custodians including Kraken. Tri-party agreements mean Bitcoin deployed in this strategy remains within qualified custody throughout, meeting the requirements of institutional allocators. Kraken also serves as one of the execution venues for the strategy’s options trading, reflecting our role across both custody and execution for institutional Bitcoin.”
Where Kraken Institutional is headed
Supporting Lombard’s transition is one part of a broader direction. Across Kraken Institutional’s work with Bitwise on Bitcoin yield, Upshift on custom vaults, and Centrifuge on tokenized funds, the throughline is the same: custody as the entry point, with execution, financing, and yield built on top of it. Applying that to one of the largest Bitcoin assets in DeFi is a natural next step.
We see this as an early step in a broader shift toward Bitcoin as productive collateral, and we’re excited to continue building the relationship with Lombard and expanding what we offer institutions.
Custody services are provided by Payward Financial, Inc. or Payward Europe Solutions, Ltd, as applicable. Payward Financial, Inc. d/b/a Kraken Financial is not an FDIC-insured bank and deposits are neither insured by nor subject to the protections of the FDIC. Payward Europe Solutions Limited, trading as Kraken, is regulated by the Central Bank of Ireland.
OTC services, including spot trading, derivatives, and lending, are offered by Payward Oceanic Ltd., a member of the Kraken Group. These products are available only to eligible clients and may not be offered in all jurisdictions. OTC transactions involve risk and may result in the loss of capital. This communication is for informational purposes only and does not constitute investment, legal, or tax advice.