TradFi Firms Eager to Transact in Bitcoin, Hindered by Regulatory Hurdles: Cantor Fitzgerald CEO

Cantor Fitzgerald CEO Howard Lutnick has noted the growing interest from traditional financial companies in Bitcoin, citing regulatory challenges as the main barrier.

In a recent post on X, Lutnick explained that while Bitcoin is becoming an emerging asset class for TradFi, regulatory requirements are preventing full adoption.

Lutnick noted that U.S. banks are hesitant to hold Bitcoin because regulations would force them to set aside an equivalent amount of their own capital, making it impractical.

“If the regulatory environment was favorable, traditional financial firms would jump into Bitcoin without hesitation,” he said.

Over the last five years, #Bitcoin has been an outsider to the tradfi community, and it’s only now dipping its toe into global finance. Cantor will help tradfi bring Bitcoin all the way in. Tradfi wants new asset classes, and $BTC is here to stay. pic.twitter.com/XdMMuw254p

— Howard Lutnick (@howardlutnick) September 3, 2024

Cantor Fitzgerald to Launch Bitcoin Financing Business

Cantor Fitzgerald, a major player in the financial sector, recently announced plans to launch a Bitcoin financing business, with $2 billion earmarked for lending to bitcoin holders.

The firm, which already manages U.S. Treasury trading for stablecoin issuer Tether, is positioning itself to provide leverage for BTC investors.

“My view is Bitcoin, like gold, should be free to trade everywhere in the world and as the largest wholesaler in the world we are going to do everything in our power to make it so,” Lutnick said in July.

“Bitcoin should trade the same as gold everywhere in the world without exception and without limitation.”

He also mentioned that Cantor already holds a substantial amount of Bitcoin.

Cantor’s new business will collaborate with selected Bitcoin custodians, though specific partners and a launch timeline were not disclosed.

Lutnick highlighted that once the initial $2 billion is utilized, Cantor plans to increase its allocation in additional $2 billion increments to sustain the business.

Lutnick, a proponent of cryptocurrency, also served as chair of Donald Trump’s presidential transition team.

Institutional Investors Increase Bitcoin ETF Holdings

A growing number of institutional investors are bolstering their Bitcoin holdings through spot ETFs, according to recent data from Bitwise.

In the second quarter of 2024, approximately 66% of these investors either maintained or increased their Bitcoin ETF positions.

Bitwise’s analysis of 13F filings submitted to the Securities and Exchange Commission (SEC) reveals that 44% of asset managers expanded their Bitcoin ETF holdings during the quarter, while 22% chose to hold steady.

Meanwhile, only 21% of institutional investors reduced their positions, and a smaller 13% decided to exit entirely.

More recently, State Street, a major U.S. financial services provider, partnered with Swiss-based crypto firm Taurus to expand its offerings in the digital asset space.

The collaboration aims to meet the growing institutional demand for digital asset services by introducing new capabilities, including the tokenization of real-world assets, which allows these assets to be traded as digital tokens.

State Street, which already provides fund administration and accounting services for crypto investments, will now extend its services to include the custody of crypto assets and the facilitation of tokenized assets.