Howard Lutnick’s Alleged Conflict of Interest: Transition from Crypto Advocate to Commerce Secretary Nominee under Trump Administration

“What I’m deeply interested in is America’s national interests.”

Howard Lutnick, chairman and CEO of Wall Street investment bank Cantor Fitzgerald and President Donald Trump’s nominee for secretary of commerce. busy To an audience of cryptocurrency enthusiasts last April.

“You can’t buy me out, okay? There’s no chance that someone will come along and say, ‘Hey, I’ll give you a dollar and you’ll do this or that or that,'” he said. “What I’m interested in is what’s great for America. And the dollar is great for America.”

As senators mull Lutnick’s confirmation in the coming weeks, they will be asked to allow one of banking’s bitcoin kingpins to lead an institution that plays a key role in the world of cryptocurrencies. The Department of Commerce shapes both domestic economic policy and international trade policy, and “has a huge impact on the crypto industry,” says Penn State law professor who specializes in fintech and author of Digital Money Demystified. said Tonya M. Evans, author of She added that conflicts of interest should give people pause.

“Ultimately, it is important that public trust and confidence in our country’s leadership is not undermined by serious conflict or even signs of injustice,” she said. “As with cryptocurrencies, trust in governments is very low, and the industry has a unique opportunity to reimagine cryptocurrencies. It is also important for the long-term stability of the U.S. economy.”

Lutnick’s relationship with cryptocurrencies is an indication of how things may change. The Biden administration has prioritized regulating FTX, once one of the world’s largest cryptocurrency exchanges, over its massive fraud and the ouster of its disgraced founder, Sam Bankman Fried.

But Lutnick has established himself as one of the most prominent supporters of cryptocurrencies in global finance, and one of the industry’s leading proponents of a type of virtual currency known as a stablecoin. I am doing it. his company Cantor Fitzgerald is the banker behind Tether, the world’s most widely used stablecoin. Tether uses blockchain technology to enable people around the world to transfer funds in dollar denominations.

“Mr. Lutnick’s deep knowledge and experience in the crypto industry is unquestionable, but his deep ties to Tether and vested interest in its success are particularly strong as Tether plays not only a central but important role in DeFi. “This raises significant concerns about potential or actual conflicts of interest,” Evans said, referring to decentralized finance. “As a result, we can expect crypto skeptics in the Senate, particularly members of the Markets Committee and the Banking Oversight Committee, to aggressively question him upon confirmation.”

Tether is the most traded cryptocurrency in the world, ahead of Bitcoin, and is currently the third largest cryptocurrency by market capitalization. Approximately $137 billion of Tether coins are in digital circulation. Tether’s market capitalization increased by 50% last year, Tether Reported.

The value of Bitcoin fluctuates wildly, but the unit of Tether, known as $USDT in the cryptocurrency market, is designed to mitigate that fluctuation by pegging it to the dollar. Tether claims that every dollar worth of its currency is backed by $1 of reserves in banks around the world.

Cantor Fitzgerald holds Treasury Bills in the United States. Regulators are tracking Tether to prove it has what its founder and CEO, Italian computer scientist Paolo Ardoino, says are reserves.

Since then 2021 Tether is providing a detailed public statement of its reserve assets, the company said. These reserves have not yet been publicly reviewed by a third party. Ardoino said he would secure an external audit.still a high priority”.

“Despite the growth in this space, crypto companies have struggled to access bank accounts and services that traditional financial companies take for granted,” a company spokesperson said. “A lack of global standards and regulations has made auditing crypto companies a major risk for Big Four accounting firms, especially since the collapse of FTX.”