By Arasu Kannagi Basil and Tommy Reggiori Wilkes
(Reuters) -Cantor Fitzgerald is launching a crypto venture with Tether and Japanese technology investor SoftBank Group to buy bitcoin, underscoring rising institutional adoption of the once-nascent asset class.
The deal, announced on Wednesday, with blank-check vehicle Cantor Equity Partners values the venture, Twenty One Capital, at $3.6 billion.
It will deepen ties between the Wall Street brokerage — chaired by Brandon Lutnick, son of the former Cantor boss and current U.S. commerce secretary — and Tether, the company behind the world’s largest stablecoin.
Twenty One will launch with more than 42,000 bitcoins, making it the world’s third-largest bitcoin treasury, it said.
“We’re not here to beat the market, we’re here to build a new one. A public stock, built by Bitcoiners, for Bitcoiners,” said Twenty One Co-Founder and CEO Jack Mallers.
The venture may seek to replicate the success of bitcoin acquirer Strategy, which saw its market value soar late last year as crypto prices jumped following Donald Trump’s U.S. presidential election victory. Trump has promised to support the crypto industry by easing regulations for digital assets.
Strategy, the biggest corporate holder of bitcoin, held 538,200 units of the world’s biggest cryptocurrency as of April 20.
Analysts have also touted bitcoin, currently trading at $94,166, as a hedge against global economic risks. It has gained more than 40% in the past six months.
“As macro and global conditions continue to highlight the need for a digital, next-generation store of value, bitcoin is increasingly stepping into that role,” said Matt Mena, crypto research strategist at 21Shares.
“What sets this rally apart is the growing conviction around bitcoin’s function as a macro hedge. More investors are turning to it not just as a speculative asset, but (also) as a flight to safety amid rising uncertainty across traditional markets.”
TETHER-CANTOR TIES
Twenty One will be majority owned by Tether and cryptocurrency exchange Bitfinex. SoftBank will have a minority ownership.
Tether and Cantor have long-standing ties from when Howard Lutnick was the brokerage’s boss.
Cantor holds much of the dollar-denominated reserves Tether says it has for every token it creates for its stablecoin.
Of the U.S. Treasury bills Tether holds, 99% are held with Cantor, Tether CEO Paolo Ardoino told Reuters last month.
“Bitcoin is one of the only truly decentralized, immutable, and censorship-resistant asset, and its role as the foundation of a new financial system is inevitable,” Ardoino said.
Tether will contribute $1.6 billion worth of bitcoin to the venture, while Bitfinex and SoftBank will put up $600 million and $900 million, respectively, according to an investor presentation.
The companies will raise $585 million in additional capital through a combination of convertible bonds and equity financing.
Twenty One will trade on the Nasdaq under the symbol “XXI” after the deal closes.
(Reporting by Arasu Kannagi Basil and Niket Nishant in Bengaluru and Tommy Reggiori Wilkes in London; Editing by Shreya Biswas and Shilpi Majumdar)
