Key Points:
- Howard Lutnick faced increased scrutiny from Senate members regarding Cantor Fitzgerald’s connections to Tether, leading him to soften his earlier claims about USDT’s asset backing.
- He confirmed a convertible debt investment involving Tether and clarified that Cantor Fitzgerald has no equity interest in Tether.
Howard Lutnick, the chairman of Cantor Fitzgerald and a nominee for U.S. Commerce Secretary under Donald Trump, defended himself during a recent Senate hearing concerning the investment firm’s ties to Tether, the issuer of the prominent stablecoin, USDT.
Lutnick testified before the Senate Committee on Commerce, Science, and Transportation on January 29, a day after appearing at the Senate Banking Committee.
Cantor Fitzgerald acts as Tether’s main custodian for U.S. Treasury assets, oversees a significant portion of its reserves, and possesses convertible debt issued by Tether’s parent firm. The assurance on the adequacy of USDT’s backing has raised questions in the cryptocurrency community for several years. In 2023, Lutnick previously attempted to alleviate these concerns but softened his stance during the most recent hearing.
He stated, “Cantor Fitzgerald does not engage in continuous diligence on Tether’s financial documents, but my statements were accurate when they were made,” reducing the impact of his prior assertion that “Tether has every penny and can generate liquidity instantly.”
On Polymarket, there’s a 10% likelihood predicted for Tether’s insolvency in 2025 and a 14% chance of it losing its peg. Lutnick also disclosed that Cantor Fitzgerald had made a convertible debt investment in Tether’s holding company in April 2024, reinforcing that this does not equate to an equity stake in the stablecoin provider.
While he acknowledged that audits for U.S. dollar stablecoins are necessary, he did not demand one specifically for Tether. When asked if he would advocate for Tether to undergo an independent audit shortly, he replied that he’d fulfill his duties in line with legal obligations if confirmed.
In addressing concerns over his influence on cryptocurrency regulations, Lutnick denied making any improper remarks about Tether, warning that the Congress should exercise caution with legislation that could jeopardize dollar dominance in the blockchain realm.
