Cantor Fitzgerald Launches Bitcoin Lending

Investment bank Cantor Fitzgerald has successfully executed its first Bitcoin financing transactions, marking a significant entry by a traditional finance institution into the crypto lending market. The company announced that its Bitcoin Financing Business is now fully operational, with an initial capacity of $2 billion that is expected to expand over time.

The business provides leverage to institutional investors who hold Bitcoin, bringing “scale, structure, and sophistication to the digital asset industry,” according to the company’s announcement. “Institutions holding Bitcoin are looking to broaden their access to diverse funding sources, and we are excited to support their liquidity needs to help them drive long term growth and success,” said Christian Wall, Co-CEO and Global Head of Fixed Income at Cantor.

The launch represents one of the few major traditional finance institutions to enter the crypto lending space directly. Cantor partnered with digital asset custodians Anchorage Digital and Copper.co to safeguard client assets, addressing security concerns that have plagued the sector. Maple Finance, an on-chain asset manager, was among the inaugural borrowers under the program.

The crypto lending sector has experienced significant turbulence, with numerous high-profile failures casting doubt on the industry’s stability. The collapse of the Terra stablecoin resulted in the failure of several firms including BlockFi, Celsius, Genesis Global Capital and Voyager. These failures highlighted counterparty risks and inadequate risk management practices that have concerned regulators.

Central banks globally have expressed wariness about financial stability risks as cryptocurrency becomes more intertwined with traditional finance. The sector’s volatility and relatively recent emergence have made regulatory authorities cautious about widespread adoption by established financial institutions.

However, Cantor’s entry differs from previous crypto lending ventures in several key ways. Unlike the failed firms which were all startups, Cantor Fitzgerald is far more established in terms of managing risk and is one of just 25 primary dealers in the US Treasury markets. The firm’s experience managing Treasury collateral for stablecoin issuer Tether, its largest crypto client, provides additional institutional credibility to its Bitcoin financing operations.