Howard Lutnick, CEO and major shareholder of financial services company Cantor Fitzgerald, has been nominated by President-elect Donald Trump to serve as Secretary of Commerce, and Lutnick was previously also a co-chairman of Trump's transition team. This may represent a shift in U.S. policy to support the cryptocurrency sector.
Cantor has strengthened its relationship with stablecoin issuer Tether over the past year, with the Wall Street Journal citing "some business partners" indicating that Cantor finalized an agreement to acquire a 5% stake in Tether, valued at up to $600 million, bringing Tether's valuation to approximately $12 billion.
According to Bloomberg, informed sources revealed that Cantor is discussing obtaining support from Tether to lend billions of dollars to clients, with clients using Bitcoin as collateral. Another informed source said the funding for the plan is estimated to start at $2 billion, with an expected final scale reaching tens of billions of dollars.
Tether's leadership views Lutnick as an important ally against proposed legislation aimed at tightening regulations on stablecoins like USDT.
Sources revealed that Tether's largest shareholder and CFO Giancarlo Devasini privately mentioned earlier this year that Lutnick would use his political influence to try to mitigate the threats facing Tether.
A spokesperson clarified to the media, "The relationship between Tether and Cantor is purely professional, based on managing reserves. The suggestion that Lutnick's involvement with (Trump's) transition team is to influence regulatory actions is ridiculous."
Tether's USDT, which is pegged to the U.S. dollar, is currently the largest stablecoin by market capitalization. Sources familiar with Cantor's business revealed to the media that Tether primarily utilizes Cantor's custody services to hold billions of dollars in U.S. government bonds, which support the value of USDT. Informed sources noted that this custody relationship brings Cantor tens of millions of dollars in revenue each year.
Last month, reports indicated that the U.S. Department of Justice was conducting a criminal investigation into Tether to determine whether Tether was being used by third parties for terrorism financing, hacking, and other illegal activities. The U.S. Treasury has also been considering sanctions against Tether, as the stablecoin USDT has been used by individuals and entities under U.S. sanctions.
Tether CEO Paolo Ardoino stated at the time, "There is no indication that Tether is under investigation," "(The Wall Street Journal) is rehashing old news," and "No further comment is necessary."
Tether has grown significantly, according to the latest financial report, the company made a profit of $7.7 billion in the first nine months of this year.
Lutnick stated last Wednesday that once the Senate confirms his nomination as Secretary of the Treasury, he will resign from his positions at Cantor, BGC, and Newmark. He said in a statement:
I intend to divest interests in these companies to comply with U.S. government ethical rules, and I anticipate no arrangements involving the sale of stock in the public market.
Two informed sources revealed that as Lutnick takes over as head of the Commerce Department, he is preparing to hand over the company's business relationship with Tether to colleagues. Lutnick's son, Brandon Lutnick, works as a trader at Cantor and previously interned at Tether in Switzerland.
"Additionally, collaborating on Bitcoin lending! The incoming U.S. Secretary of Commerce's company invests $600 million in Tether" was first published on Blocktempo.
