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A major push for Bitcoin in TradFi came from the approval of spot Bitcoin ETFs by the US SEC in January.
Howard Lutnick, CEO of Cantor Fitzgerald, recently shed light on the growing interest among traditional financial (TradFi) institutions in Bitcoin as a new asset class. However, he emphasized that regulatory barriers are preventing these companies from fully embracing Bitcoin.
In a post on X, Lutnick described Bitcoin as an “outsider to the TradFi community” noting that it is only now beginning to integrate into the broader global financial system.
A major push for Bitcoin in TradFi came from the approval of spot Bitcoin ETFs by the US Securities and Exchange Commission (SEC) in January. According to 13F filings with the SEC, as of August 30, traditional financial companies held $11.7 billion in spot Bitcoin ETFs.
Data from SoSo Value reveals that these ETFs have attracted $17.31 billion in cumulative inflows since their launch earlier this year. However, Lutnick believes that these funds are just starting to go a “little bit” mainstream, indicating massive potential growth in the future.
“Banks still can’t clear [Bitcoin spot ETFs], banks still can’t transact it, banks still can’t custodian it, and they can’t finance it yet. But they want to transact it, they want a new asset class,” he stated.
Notably, under existing rules, banks are required to set aside an equivalent amount of their own capital when holding Bitcoin, which Lutnick likened to keeping that money “in jail.” This stringent requirement discourages traditional institutions from holding Bitcoin, even as interest in the cryptocurrency grows. The Cantor Fitzgerald CEO explains:
“If the regulatory environment is good, you will see all traditional financial services companies, be it banks, be it brokerage companies, they’re all going to go to Bitcoin.”
Lutnick also shared insights into Cantor Fitzgerald’s plans to expand its participation in the Bitcoin space. The firm, which already owns a major amount of Bitcoin, is set to launch a Bitcoin financing business with $2 billion in lending capital. It is partnering with select Bitcoin custodians to launch the effort, providing leverage to Bitcoin holders.
TradFi’s Bitcoin Adoption
Not just Cantor Fitzgerald but other prominent firms in the traditional finance space, including JPMorgan, Visa, and Mastercard, have made investments in Bitcoin and the broader digital asset sector in one way or another. Additionally, the Bank of America, along with leading asset management firms across the US, have significant Bitcoin-related services.
In June, Visa teamed up with Transak to allow users to initiate Bitcoin and crypto withdrawals. The company also debuted a crypto-to-fiat service with Bitcoin cashbacks. Mastercard has also introduced several services focused on digital assets and recently teamed up with JPMorgan and Citi to participate in a trial focused on distributed ledger technology (DLT).
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
With a background in finance and a passion for innovation, Anisha has been covering the ever-evolving world of crypto for over four years. Her deep understanding of the crypto market have made her a trusted source for analysis and news. Whether it's dissecting the latest trends or decoding whitepapers, Anisha is dedicated to bringing clarity to the world of digital assets.
