Billion-Dollar Asset Manager to Launch Bitcoin Lending Service

• At the Bitcoin 2024 Conference, Cantor Fitzgerald announced plans to launch a $2 billion Bitcoin financing business, offering loans against spot Bitcoin.
• This marks the firm’s significant move into the crypto sector, aiming to bridge traditional finance and digital assets.

During last week’s Bitcoin 2024 Conference event, Cantor Fitzgerald – one of the largest traditional finance brokers – announced its plans to launch a Bitcoin financing business for those who are willing to borrow against the cryptocurrency.

As a result, the TradFi giant plans to start a lending pool of $2 billion initial capital, and would increase by blocs of 42 billion further if need be. Cantor Fitzgerald is among the first prime brokers from TadFi to get involved with the sector, while offering lending against spot Bitcoin. Howard Lutnick, Chairman of Cantor Fitzgerald said:

Cantor Fitzgerald arranges and finances vast amounts of securities and commodities and, as strong supporters of Bitcoin, will now build an incredible platform to support Bitcoin investors’ financing needs. We are excited to help unlock Bitcoin’s full potential and continue bridging the gap between traditional finance and digital assets.

Cantor is a popular name in the cryptosphere as it manages Treasury assets of Tehter’s USDT stablecoin, which has a market cap of $114 billion. As part of the reserves, Tether has a lending portfolio of more than $4.7 billion in the March-ending quarter. Additionally, the company also holds more than $5 billion in BTC, per the CNF report.

Will Bitcoin Lending See Interest Going Ahead?

During the crypto winter of 2022, several of the crypto lending firms went bust leading to millions of dollars in losses to investors, creditors, and others. The collapse of several top crypto lenders like Celsisus, Three Arowws, and others has put the space in a bad light and growing regulatory scrutiny.

However, not everyone is open to the idea of Bitcoin lending. One of the key features of Bitcoin is its finite supply, however, significant re-hypothication would effectively increase the BTC supply figure. Top asset managers like BlackRock have come up with products like Bitcoin ETF citing BTC’s prowess, per the CNF update.

On the other hand, a healthy lending market is the foundational pillar of traditional finance (TradFi). Although Bitcoin with a $1.37 trillion market is a traditional commodity, securities lending remains a major revenue stream in TradFi.

David Arnold, who manages Altenburg Capital,  said “You’ve got a trillion-dollar notional asset market, which is not generating a yield right now”.

Mr. Arnold identifies three key issues hindering large hedge fund engagement with crypto. He contrasts the legal certainty in Switzerland with the lack of regulatory clarity in the U.S. Additionally, there are concerns about the bankruptcy remoteness of assets and the very limited pool of regulated prime brokers (PBs) in the crypto space. Since the Lehman collapse in 2008, hedge funds have been reluctant to rely on single prime brokers, and many crypto specialists are relatively small.

Amid the movement by the US government, the Bitcoin price has come under selling pressure, per the CNF report. As of the press time, Bitcoin is trading 3.7% down at $66,378.28 with a market cap of $1.31 trillion.