Cantor Fitzgerald Acquires 5% Stake in Tether, Plans $2B Bitcoin Lending

TLDR

• Cantor Fitzgerald acquired a 5% stake in Tether worth up to $600 million and plans a $2 billion Bitcoin-backed lending program
• CEO Howard Lutnick has been nominated as Trump’s Secretary of Commerce and will step down from Cantor Fitzgerald if confirmed
• Tether holds $134 billion in reserves, largely in U.S. Treasury bills, with Cantor Fitzgerald as a key banking partner
• The U.S. Attorney’s Office for the Southern District of New York is investigating Tether for potential illicit activities
• Tether faces regulatory challenges, particularly in Europe with Markets in Crypto-Assets Regulation compliance

Cantor Fitzgerald, one of Wall Street’s established financial services firms, has made a major move into the cryptocurrency sector by acquiring a 5% stake in Tether, valued at up to $600 million.

The investment comes alongside plans to launch a $2 billion Bitcoin-backed lending program, marking a substantial commitment to digital asset markets.

The deal, completed within the past year, positions Cantor Fitzgerald as a key player in the cryptocurrency ecosystem. The firm’s stake in Tether, the company behind the USDT stablecoin, represents one of the largest traditional finance investments in the crypto sector to date.

Howard Lutnick, CEO of Cantor Fitzgerald, has emerged as a central figure in this development. Recently nominated as President-elect Donald Trump’s Secretary of Commerce, Lutnick has announced he will step down from his position at Cantor Fitzgerald if confirmed by the Senate.

The timing of the acquisition has drawn attention from market observers, as Tether continues to face regulatory scrutiny. The U.S. Attorney’s Office for the Southern District of New York is currently investigating the stablecoin issuer for potential involvement in illicit activities, including terrorism financing.

Cantor Fitzgerald’s relationship with Tether extends beyond the equity investment. The firm currently holds a substantial portion of Tether’s $134 billion reserves, primarily in U.S. Treasury bills. This arrangement has proven crucial for Tether, particularly during periods when many global banks distanced themselves from cryptocurrency companies.

WSJ on Tether…

“Devasini said privately earlier this yr that Lutnick will use his political clout to try to defuse threats facing Tether.”

“Cantor, which is majority-owned by Lutnick, holds most of Tether’s $134bil in assets.”

Cantor apparently has 5% stake in Tether as well. pic.twitter.com/QHOWsvY4bq

— Nate Geraci (@NateGeraci) November 24, 2024

The planned $2 billion Bitcoin lending program aims to provide leverage for Bitcoin holders, allowing them to use their cryptocurrency as collateral for dollar loans. This initiative was announced by Lutnick at the Bitcoin 2024 conference in July, highlighting the firm’s commitment to expanding its crypto services.

Tether’s USDT stablecoin plays a vital role in global crypto liquidity, maintaining a one-to-one peg with the U.S. dollar. The stablecoin issuer backs its tokens with reserves of U.S. Treasury securities, which has become a source of revenue for Cantor Fitzgerald through its custodial relationship.

In Europe, Tether faces additional challenges as it works to comply with Markets in Crypto-Assets Regulation requirements. The investment from Cantor Fitzgerald could help strengthen Tether’s position as it navigates these regulatory hurdles.

Lutnick has publicly defended Tether’s financial health, particularly highlighting its utility in countries experiencing high inflation, such as Argentina, Turkey, and Venezuela. His support comes at a time when Tether seeks to improve its reputation in traditional financial circles.

The investment represents a small portion of Cantor Fitzgerald’s overall operations, as the firm manages approximately $3.5 billion in assets according to Fintel data. However, the strategic importance of the deal extends beyond its monetary value.

As part of Trump’s transition team, Lutnick is involved in vetting candidates for key government positions, including roles that could influence cryptocurrency regulation. This connection has sparked discussions about the potential impact on future crypto policy.

The partnership between Cantor Fitzgerald and Tether bridges traditional finance and the cryptocurrency sector. The deal provides Tether with increased institutional backing while giving Cantor Fitzgerald a strong position in the growing digital asset market.

Recent developments indicate that Cantor Fitzgerald continues to expand its cryptocurrency services. The firm’s moves suggest a long-term commitment to integrating digital assets into its business model.

The latest reports confirm that the Bitcoin lending program is moving forward as planned, with Cantor Fitzgerald preparing to launch the service in the coming months.