Donald Trump’s nominee for Commerce Secretary, Howard Lutnick, is now directly applying his financial background to tackle new solutions by reportedly choosing Cantor Fitzgerald to work with Tether on a $2 billion Bitcoin (BTC) pilot program.
Financial services firm Cantor Fitzgerald has had a relationship with Tether for some time and retains most of the company’s assets in U.S. Treasury bills. This partnership represents one giant leap toward making a connection between conventional financing and crypto-assets; however, it has elicited positive and negative feelings in the financial markets.
Cantor Fitzgerald and Tether: A $2 Billion BTC Partnership
Cantor Fitzgerald, well established in its strong financial foundation, is set to unleash a plan where a client desires to take a dollar loan but can do with giving Bitcoin as security. According to Bloomberg, the effort was expected to start at $2 billion and could eventually cost tens of dollars.
The place here of banking is significant, and it is to it that Cantor Fitzgerald refers as the banking partner for Tether. The firm earns tens of millions annually for custody services, holding billions in U.S. Treasury bills that back Tether’s USDT stablecoin. Bloomberg was told by an anonymous source that Tether would be a major funding source for the project, although this has yet to be confirmed.
This agreement shows clearly that the two are linked in a complementary way. According to The Wall Street Journal, Cantor Fitzgerald has invested $600 million on a 5% stake in Tether in recent weeks.
Probably, the strengthening of the project’s context is that Howard Lutnick is Cantor Fitzgerald’s CEO and Trump’s Commerce Secretary nominee. His new role in the government is planned to support Tether politically while the project is under consistent regulation.
Howard Lutnick: Bridging Politics and Crypto
That Lutnick has been nominated for Commerce Secretary brings politics into the project. An advocate of Bitcoin and other digital currencies, Lutnick has expressed his opinion in regard to the classification of Bitcoin as a commodity such as gold or oil. In September, attending an industry event, he said, “Regulators have no clue about digital assets, they need to reason about Bitcoin sensibly.”
Lutnick’s roles are not limited to lobbying for change, however. He is serving as the transition adviser to the elected President Donald Trump and is directly involved in deciding some of the main government officers – the regulators potentially overseeing Tether. The Wall Street Journal has claimed that Lutnick’s association could counterbalance threats against Tether – an organisation that is often caught in controversies about reserve and regulation.
The largest investor in Tether seems to be Giancarlo Devasini, who is stated to have trusted Lutnick in protecting the firm’s interests. That is why, with Lutnick’s political influence, the $ 2 billion BTC project can count on a competitive advantage in overcoming legal obstacles.
Regulatory Challenges and Opportunities
However, the identified partnership has issues that border its success. Tether has been asked multiple times regarding its reserve disclosure, let alone, adherence to American laws. Tether faced regulatory trouble last month when The Wall Street Journal said the firm was being investigated over sanctions and AML violations, both of which are street claims that Tether has dismissed.
Another stability that has characterized Tether is the sheer support the firm has received from Cantor Fitzgerald. While other banks’ severed the banking ties to avoid the consequences of working with an exchange that accepted USDT, Cantor Fitzgerald continued to facilitate the banking services, which served to underpin market participants’ belief in the USD-stablecoin linkage.
This cooperation is seen as a major move towards to legitimizing of Bitcoin as collateral. But critics warn that higher levels of politics mean that the regulation can become more difficult.
Industry experts are divided. While there are those who believe this is the new advance of crypto acceptance into main stream economy, there are those who argue that mixing of economy and polity can dent the existing problems of regulation.
Conclusion on Cantor Fitzgerald Collaboration
Thanks to Donald Trump’s Commerce Secretary nominee Howard Lutnick and his company Cantor Fitzgerald, we can witness the integration of ‘‘traditional’’ Wall Street and Bitcoin in what can be considered as a pioneering deal. Lossless Ohene-Djan, Chief Operating Officer of Blockstation believes that the partnership is set to revolutionize digital asset financing as $2 billion in Bitcoin-backed lending gets on the horizon.
On the one hand, Lutnick’s double position can bring him political benefits, on the other, such a position presupposes greater liability. As Tether struggles to address regulatory issues that have followed it lately, the coming months will reveal whether this ambitious project will find its place in the new financial and technological world or will hit serious barriers. Keep following Turkishnyradio to keep an eye on Cantor Fitzgerald and Tether’s collaboration.
