Bitcoin's trillion-dollar market cap has made it the world's premier digital store of value, but most of that capital sits idle because the infrastructure to safely deploy native Bitcoin into transparent, programmable credit markets simply hasn't existed until now. Today, that changes. Sui announced the launch of Hashi testnet, a new Bitcoin infrastructure layer that gives developers, custodians, and financial institutions their first real opportunity to build Bitcoin-backed lending, borrowing, and credit products before the system reaches mainnet.

The testnet launch represents a watershed moment for institutional crypto adoption. More than a trillion dollars of Bitcoin remains largely dormant, locked away as a store of value with no way to productively deploy it in onchain credit markets. Hashi solves that problem by introducing what Sui calls the Guardian Layer, a defense-in-depth security architecture purpose-built to help institutions securely manage Bitcoin collateral while preserving the transparency and programmability that make onchain finance attractive in the first place.

What Is the Guardian Layer and Why Does It Matter for Institutions?

The Guardian Layer is Hashi's most significant innovation for institutional participants. It introduces configurable safeguards that can slow or prevent potentially malicious activity before collateral leaves the system, helping institutions manage operational risk while maintaining full onchain visibility into collateral health. All Bitcoin collateral, technically called UTXOs (unspent transaction outputs), is secured with a 2-of-2 multisig requiring both an MPC (multiparty computation) signature from Hashi validators and a signature from the guardian, creating an additional layer of protection against malicious activity.

For institutional treasurers and risk managers, this dual-signature requirement is critical. It means no single party can move Bitcoin collateral unilaterally, a safeguard that has been missing from previous attempts to bring Bitcoin into programmable finance. The Guardian Layer also addresses a concern that has haunted institutional Bitcoin adoption: tax consequences. Fenwick, one of the foremost law firms in digital assets, concluded that Hashi's deposit and redemption mechanics should not constitute taxable events under U.S. tax law, removing a major barrier to institutional participation.

How Are Institutions Preparing to Use Hashi?

• Custody and Infrastructure: BitGo, Cobo, Fordefi (by Paxos), Ledger, and SwissBorg are integrating custody and wallet infrastructure to support institutional and retail self-custody on Hashi.
• Liquidity and Market Making: Bullish, Cumberland, FalconX, and Erebor (an OCC-chartered bank) are committing capital and liquidity provision to ensure deep, functioning credit markets for Bitcoin-backed assets.
• Lending and DeFi Protocols: AlphaLend, Bluefin, Current, Scallop, Suilend, Navi, and Fluid are building native lending protocols and capital-efficient systems to enable retail and institutional borrowing against Bitcoin collateral.
• Real-World Asset Integration: Wave Digital Assets, an SEC-registered investment adviser, has committed to three years of best efforts to prioritize the tokenization of Bitcoin-yield-bearing bond products on Sui using Hashi, signaling conviction that programmable Bitcoin fixed-income markets are ready for institutional adoption.
• Insurance and Risk Management: Soter Insure is providing native, Bitcoin-denominated institutional insurance, while Asymptotic, Certora, and OtterSec are conducting smart contract security audits and formal verification.

The ecosystem backing Hashi is remarkably deep. Over 25 partners spanning DeFi, banking infrastructure, and capital markets have committed to building on the testnet. This includes several of crypto's heavyweights and institutional players that were previously skeptical of onchain finance.

What Does This Mean for the Broader Institutional Crypto Landscape?

Hashi's launch arrives at a critical moment for institutional crypto adoption. While institutional participation has accelerated through spot Bitcoin and Ethereum ETFs (exchange-traded funds), corporate treasury strategies, and expanding regulatory clarity, the infrastructure to actually use Bitcoin productively in credit markets has lagged. Hashi closes that gap by giving institutions the tools to build what Adeniyi Abiodun, Co-Founder and Chief Product Officer of Mysten Labs, describes as the natural evolution of any major asset class.

"Every major asset class eventually develops deep credit, lending, and liquidity markets. Bitcoin is no different. Hashi is giving developers the infrastructure to build those markets onchain with the security, transparency, and programmability institutions have been waiting for," said Abiodun.

Adeniyi Abiodun, Co-Founder and Chief Product Officer of Mysten Labs

The timing is significant because it comes as traditional finance continues to grapple with how to integrate crypto into existing banking and capital markets infrastructure. Hashi offers a path forward that doesn't require institutions to abandon their existing custody and risk management practices. Instead, it layers institutional-grade security on top of programmable onchain finance, allowing Bitcoin to function as productive collateral without sacrificing the safety and transparency that institutions demand.

Developers can now access technical documentation, integration guides, and testnet configurations at sui.io/hashi. The ecosystem buildout will ultimately power institutional Bitcoin lending, borrowing, and credit origination on Sui, with builders validating integrations, testing operational workflows, and preparing production-ready applications before Hashi reaches mainnet.