Bitcoin Repo? Cantor Completes Deal With Tether As Crypto-Lending Platform Takes Shape

Five days after Howard Lutnick was appointed as President-elect Donald Trump’s secretary of commerce, his financial services firm – Cantor Fitzgerald – reportedly has taken a 5% stake in stablecoin issuer Tether.

The 5% stake was valued at as much as $600 million when the agreement was made, WSJ said in the Nov. 24 report, citing information from business associates familiar with the matter.

It could mean Tether will receive more political support as Cantor Fitzgerald’s CEO Howard Lutnick was selected as United States President-elect Donald Trump’s secretary of commerce on Nov. 19.

Giancarlo Devasini, suspected to be the largest shareholder of Tether, reportedly said words to the effect of: Lutnick will use his political clout to try to defuse threats facing Tether, WSJ claimed. 

Tether currently uses Cantor’s custody business to hold the billions of dollars of US Treasuries that support the value of its dominant USDT stablecoin.

That custody relationship earns Cantor tens of millions of dollars a year, according to people familiar with the matter.

Lutnick has publicly expressed confidence in Tether’s financial health several times and highlighted the important role that a US dollar-backed stablecoin can play for people in high-inflation countries like Argentina, Turkey and Venezuela.

More notably, in our opinion,Bloomberg reports Cantor is discussing receiving support from Tether for its planned multibillion-dollar program to lend dollars to clients who put up Bitcoin as collateral, (that was announced at the Bitcoin 2024 conference back in July).

“We will offer leverage to those who own Bitcoin. We are going to launch with $2 billion of lending,” Lutnick said at the time.

“Cantor Fitzgerald arranges and finances vast amounts of securities and commodities and, as strong supporters of Bitcoin, will now build an incredible platform to support Bitcoin investors’ financing needs,” adding that:

“We are excited to help unlock Bitcoin’s full potential and continue bridging the gap between traditional finance and digital assets.”

A separate source told Bloomberg that funding for the program will start at $2 billion and is expected to eventually reach into the tens of billions.

And while some sceptics have warned this could make the bitcoin ecosystem more pro-cyclical, arguably the benefits of wider adoption and its acceptance as ‘safe collateral’ is a far greater benefit over time…

Bitcoin is about to become “safe collateral”

Cantor Fitzgerald is discussing receiving support from Tether for its planned multibillion-dollar program to lend dollars to clients who put up Bitcoin as collateral: BBG

— zerohedge (@zerohedge) November 24, 2024

One thing is for sure, with Gensler gone, and (pro-crypto) Bessent running the show at Treasury, Lutnick’s path to victory on his crypto bets is becoming clearer.

Cantor Fitzgerald currently holds around $3.5 billion worth of assets, according to Fintel data.

Finally, as Bloomberg reports, as Lutnick moves to run the Commerce Department, he is preparing to hand over his firm’s relationship with Tether, which he largely controls, to colleagues, according to two people briefed on the matter. His son, Brandon Lutnick, works at Cantor as a trader and previously interned with Tether in Lugano, Switzerland (counting their gold bar collateral).

In a statement sent before Lutnick’s selection as commerce secretary, the Tether spokesperson said that “Tether’s relationship with Cantor is entirely professional, based on managing reserves. The claim that Lutnick’s involvement in a transition team somehow translates to influence over regulatory actions is laughable.”