Howard Lutnick, Chairman and CEO of Cantor Fitzgerald and President-elect Donald Trump’s pick for Commerce Secretary, is reportedly in discussions with Tether to launch a $2 billion project to lend US dollars to clients using Bitcoin as collateral, according to Bloomberg. While no official confirmation has been made, the program is anticipated to eventually scale to tens of billions.
“Tether Investments is looking to use part of the profits generated in the past years for different opportunities,” Tether stated in an emailed response to Reuters, neither confirming nor denying the possibility of the Bitcoin lending project.
Talks Following a Major Investment
A separate report by The Wall Street Journal revealed that Cantor Fitzgerald acquired a 5 per cent ownership stake in Tether over the past year, valued at $600 million.
In addition to the investment, Cantor and Tether are already collaborating on business activities. Tether reportedly holds billions of dollars worth of US Treasuries with Cantor, which backs USDT and generates tens of millions of dollars annually for the financial services firm.
Lutnick’s association with Tether brings the incoming Trump administration closer to the cryptocurrency industry. Trump has already announced his intention to nominate Lutnick, a prominent figure in crypto, to head the Commerce Department, with “additional direct responsibility” for the U.S. Trade Representative’s office. Lutnick is also serving as co-chair of Trump’s transition team.
A Controversial Crypto Company
Tether is widely known for its USD-pegged stablecoin, USDT, which ranks as the third-largest cryptocurrency with a market cap exceeding $132.7 billion. However, the company has faced ongoing controversy, including allegations of insufficient reserves to back its stablecoins.
Previously, Tether reached a settlement with US authorities over questionable business practices linked to its sister company, Bitfinex. Currently, the US government is investigating Tether for potential sanctions violations and breaches of anti-money laundering regulations, which the company has denied.
While Lutnick’s firm is planning to introduce Bitcoin lending, US regulators have cracked down on several crypto lending platforms, labelling their services as unlawful.