Key Points
- Cantor Fitzgerald acquired a 5% ownership stake in Tether valued at up to $600 million, marking a significant partnership between traditional finance and the cryptocurrency sector.
- Howard Lutnick, Cantor Fitzgerald’s CEO and Trump’s Commerce Secretary nominee, is positioned to potentially influence crypto policy, raising questions about regulatory implications.
Strategic Partnership Forms Amid Regulatory Scrutiny
According to a Wall Street Journal report, financial services giant Cantor Fitzgerald has deepened its ties with stablecoin issuer Tether by securing a 5% ownership stake valued at up to $600 million within the past year. This deal implies a total valuation of approximately $12 billion for the stablecoin issuer, marking a significant milestone in the convergence of traditional finance and cryptocurrency markets.
The timing of this revelation is particularly notable, coming just days after Cantor Fitzgerald’s CEO Howard Lutnick was nominated as Commerce Secretary in President-elect Donald Trump’s administration. Lutnick, who currently serves on Trump’s transition team, has announced his intention to step down from his positions at Cantor, BGC, and Newmark upon Senate confirmation.
Regulatory Implications and Political Connections
The partnership has drawn attention due to its potential regulatory implications. According to the WSJ report, Tether’s leadership sees Lutnick as a crucial ally in opposing proposed legislation aimed at increasing oversight of offshore stablecoins. Giancarlo Devasini, reportedly Tether’s largest shareholder, was cited by business associates as saying Lutnick would leverage his political influence to address threats facing Tether.
However, Tether has pushed back against these characterizations. A spokesperson stated to the WSJ that “Tether’s relationship with Cantor is entirely professional, based on managing reserves,” dismissing claims about Lutnick’s potential regulatory influence as “laughable.”
Financial Performance and Ongoing Investigations
The partnership comes at a time of significant growth for Tether, which has reported $7.7 billion in profit through the first nine months of the year, benefiting from soaring Treasury yields. Cantor Fitzgerald currently manages most of Tether’s substantial $133 billion in assets, primarily in U.S. Treasury bills, earning tens of millions in annual fees.
However, the relationship faces potential challenges. The Treasury Department is reportedly considering sanctions against Tether due to the stablecoin’s alleged use by sanctioned entities. Additionally, a criminal investigation is examining whether third parties are using Tether for illicit activities, including terrorism financing – though Tether CEO Paolo Ardoino has strongly denied these claims, describing them as “old noise.”
The development of this partnership between Cantor Fitzgerald and Tether represents a significant milestone in the integration of traditional financial institutions with digital asset companies, potentially reshaping the regulatory landscape for stablecoins in the United States.
