Chainlink has launched CustodySync, a solution designed to help qualified custodians provide institutional clients with access to decentralized finance (DeFi) lending markets while keeping their digital assets under existing custody arrangements. Anchorage Digital Bank is the launch partner for the initiative.
CustodySync aims to enable institutions to borrow against digital assets held by qualified custodians without transferring those assets out of custody. The service is intended to address a longstanding barrier to institutional participation in DeFi, where lending opportunities have often required firms to move assets into blockchain-based protocols, potentially conflicting with regulatory requirements and internal risk controls.
Bridging the gap between custody and DeFi
Chainlink estimates that digital assets held in custody total approximately $700 billion, representing less than 0.5% of the $250 trillion in traditional assets under custody. Meanwhile, DeFi lending markets account for more than $80 billion in deposits and over $30 billion in active loans.
The difference highlights the potential for greater institutional participation in onchain lending. However, banks, investment firms, and other institutions may be required by regulations, investment mandates or internal policies to keep assets with qualified custodians. Moving those holdings into DeFi protocols can create compliance challenges and expose institutions to smart contract risks they are not permitted to assume directly.
Custody providers and blockchain lending protocols have also historically operated through separate systems. Custodians typically monitor collateral balances and loan-to-value ratios within their own infrastructure, while lending protocols track positions on-chain. Differences in data or delays in communication can cause the systems to report inconsistent information about the same loan.
Such discrepancies can complicate decisions involving margin calls and liquidations. A protocol could liquidate a position that remains adequately collateralized, or delay action until the collateral is no longer sufficient to cover the outstanding loan.
Shared data throughout the lending process
CustodySync is designed to keep custodians and DeFi lending markets aligned from the initial collateral deposit and borrowing stage through repayment and potential liquidation. Chainlink provides verified data intended to help both parties work from a consistent view of the loan and its collateral.
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https://t.co/WOq9AHASUf— Chainlink (@chainlink) October 26, 2026
The solution is intended to preserve custodial control of institutional assets while allowing borrowers to access blockchain-based lending markets. This arrangement could help institutions use digital asset holdings more efficiently without abandoning existing custody structures.
By coordinating information between custodians and on-chain protocols, the service seeks to reduce operational friction associated with managing collateral across separate financial systems. Consistent information about loan positions may also help participants make more reliable decisions when collateral values change, or lending conditions require intervention.
Anchorage Digital provides collateral management infrastructure
Anchorage Digital will support the launch through its custodial infrastructure and Atlas Collateral Management product, which are designed to work alongside participating lending protocols.
The arrangement follows a three-party model familiar to institutional financial markets. Anchorage Digital acts as the appointed collateral agent for the lending protocols, while institutions retain their established custody relationship and gain access to borrowing opportunities.
This structure is intended to make DeFi lending more compatible with institutional requirements around asset control, risk management, and operational oversight. Rather than choosing between maintaining assets with a qualified custodian and accessing decentralized lending markets, eligible institutions could potentially pursue both through a coordinated framework.
CustodySync‘s launch reflects efforts to connect traditional institutional custody arrangements with blockchain-based financial services. Its broader adoption will depend on participation from custodians and lending protocols, as well as institutions’ assessment of the associated operational, regulatory, and technology risks.