Centralized crypto lending is dominated by approximately 73% courtesy of Tether, as per a recent report.
Traditional Finance Players Hold Significant Share in Centralized Crypto Lending Market
As of mid-2025, traditional finance players hold a significant but not dominant share in the centralized cryptocurrency lending market, which accounts for about 33.48% of the broader crypto collateralized lending market. The centralized crypto lending market size was approximately $11.2 billion by late 2024, controlled predominantly by a few major players such as Tether, Galaxy, and Ledn, who hold about 90% of the CeFi lending market share.
The risk profile of these centralized finance (CeFi) lenders is primarily characterized by counterparty risk, where users must trust the platform to manage funds responsibly and maintain solvency. Past collapses highlight the danger of platform failure, and additional risks include platform security (hacking) and liquidity constraints during market stress. CeFi tends to offer higher yields than staking or other interest-bearing products but at the cost of these elevated risks.
Tether, the dominant player in the centralized cryptocurrency lending market, holds around 73% of the market. Tether's $8.2 billion lending sits alongside several other risky or volatile assets, including almost $8 billion in bitcoin. However, Tether has $7 billion in equity within the issuer, which could potentially cover mis-steps.
The entrance of TradFi players, such as Cantor Fitzgerald, could cause the pendulum to swing back towards centralized finance (CeFi) in the crypto lending market. Led by the current US Commerce Secretary Howard Lutnick, Cantor Fitzgerald plans to start crypto lending with $2 billion of financing initially, making it one of the larger players in the market.
However, without direct data about Cantor Fitzgerald’s current market share or specific activities in CeFi lending, its precise impact remains speculative. The potential entry of Cantor Fitzgerald could increase institutional confidence and potentially attract more traditional finance capital into the CeFi lending space. It could also encourage more rigorous risk management and regulatory compliance, possibly reducing counterparty risk for users. Elevated competitive pressure on existing CeFi players such as Tether and Galaxy could potentially drive innovation or better risk mitigations.
The report by Galaxy Digital also highlights changes in practices among crypto lenders, implying that they have moved away from lending long and borrowing short term, a practice that led to trouble for previous lenders. The graphic in the report shows the number of previous participants that went bankrupt in the cryptocurrency lending market.
In contrast, DeFi has become dominant in the crypto lending market, holding up well during volatile times, while CeFi lending outstanding at the end of 2024 was only around a third of its peak in 2021. The figures exclude crypto collateralized products (CDP) - stablecoins backed by crypto.
In summary, traditional finance players dominate centralized lending in crypto but face significant risk from trust and platform management issues. Cantor Fitzgerald’s potential entry could bring more institutional rigor but currently has no widely reported market share or impact data.
\n\nTable 1: Centralized Crypto Lending Market Share and Size (2025)
| Sector | Market Share / Size (2025) | Key Players / Notes | Risk Profile | |--------|------------------------------------------|-------------------------------------------------------------|------------------------------------------------------| | CeFi Lending | 33.48% of crypto collateralized lending market (Q1 2025) | Tether, Galaxy, Ledn hold ~90% of CeFi lending ($11.2bn late 2024) | Counterparty risk, platform solvency, hacking risks | | DeFi Lending | 49.86% market share (Q1 2025) | Aave dominant with 45% market share in DeFi lending | Smart contract risk, more transparent but still evolving | | Centralized Exchange Market | Binance controls ~39-40% market share mid-2025 | Binance major, others like Gate.io and Bitget follow | Exchange risk, regulatory exposure |
- The entrance of traditional finance players, like Cantor Fitzgerald, could offer insights into the stablecoin market, as they plan to start crypto lending with $2 billion of financing and could potentially attract more traditional finance capital into the centralized finance (CeFi) lending space.
- Beyond centralized finance (CeFi) and decentralized finance (DeFi) lending, the market for crypto collateralized products, such as stablecoins, is also significant, although it's not included in the reported figures for the broader crypto collateralized lending market.
- As traditional finance players invest more in centralized cryptocurrency lending, technology will play a crucial role in ensuring stability, especially in terms of risk management and compliance, as they aim to reduce counterparty risk for users and encourage more rigorous practices in the industry.
