Howard Lutnick, CEO of Cantor Fitzgerald, is nominated as Commerce Secretary, which could affect U.S. crypto rules. His firm owns 5% of Tether and handles most of its reserves. He also introduced a $2 billion Bitcoin lending program.
Howard Lutnick, the CEO of Cantor Fitzgerald, has been nominated as Commerce Secretary under President-elect Donald Trump’s administration. Lutnick’s appointment could regulating digital assets like stablecoins, particularly Tether’s USDT.
Cantor Fitzgerald strengthens Tether Partnership
Over the past year, Cantor Fitzgerald strengthened its partnership with Tether, the world’s largest stablecoin issuer, by acquiring a 5% ownership stake. The deal, worth up to $600 million, that values Tether at around $12 billion.
As the CEO of Cantor Fitzgerald, Lutnick played a major role in building this partnership. But Tether says its work with Cantor is only about managing reserves, not influencing rules.
While Tether is a dominant player in the stablecoin market, as it has faced ongoing legal and regulatory investigations by U.S. authorities for possible use in illegal activities like funding terrorism or avoiding U.S. sanctions. This specifies the possible illegal activities.
Thus, Cantor Fitzgerald manages most of Tether’s $133 billion reserves, primarily in U.S. Treasury bills. In return, Cantor earns millions in fees annually.
Additionally, the Treasury Department is considering sanctions against Tether for its misuse by sanctioned entities. Tether’s CEO, Paolo Ardoino, has rejected these claims by calling them “old news” and saying there’s no current investigation into the company.
Despite these issues, Tether has made a lot of money by earning $7.7 billion in the first nine months of 2024, mainly because of higher earnings from its Treasury.
Lutnick has said he will resign at Cantor Fitzgerald, BGC Partners, and Newmark once he will be selected as Commerce Secretary. He also plans to sell his shares to follow government rules. He added that he doesn’t plan to sell shares on the open market.
Lutnick’s appointment could change the U.S. cryptocurrency market. His support for stablecoins and Tether might make things better for digital assets. He also announced Cantor Fitzgerald’s new Bitcoin lending program at the Bitcoin 2024 conference, saying they plan to launch with $2 billion in lending.
Cantor Fitzgerald currently holds about $3.5 billion in assets. He has also pointed out how useful dollar-backed stablecoins can be for countries with high inflation, like Argentina and Venezuela.
Lutnick’s nomination underscores the increasing incorporation of cryptocurrency and politics. The Wall Street Journal reported that Lutnick will use his political influence to try to reduce the risks and challenges facing by Tether in the Trump administration.
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