FHLB Led Billions of Dollars to the Most Prominent Crypto Banks
The Federal Home Loan Banks System (FHLB) of the United States is financing billions of dollars to two of the biggest cryptocurrency banks to lessen the impact of a spike in withdrawals.
The FHLB is an association of 11 regional banks from different parts of the country. And that lend money to other banks and lenders. The system, which started during the Great Depression to promote housing finance, now has over 6,500 members and $1.1 trillion in assets.
Traditional Finances Against Crypto Contagion
Following the demise of FTX, traditional finance has been immune to the crypto contagion. Still, the paper warns that FHLB loans to banks exposed to cryptocurrency could raise that risk.
The company is said to have made a nearly $10 billion loan to the commercial bank Signature Bank in the final quarter of 2022. For making it one of the biggest bank borrowing deals in recent memory. The New York Department of Financial Services gave Signature permission to use blockchain technology for its digital platform in 2018.
Silvergate, which requested at least $3.6 billion from the FHLB, was the second bank to submit a request. Silvergate experienced massive deposit outflows in the last quarter of 2022. And responded by selling debt instruments, among other things, to maintain cash liquidity. The total net loss for the period attributable to common shareholders was $1 billion.
In contrast to the previous quarter, when deposits hit $12 billion, the average digital asset customer deposit in the fourth quarter of 2022 was $7.3 billion, per Silvergate’s study.
Many companies impacted by the FTX group’s collapse, which affected the entire crypto industry. Cryptocurrency lender Genesis, whose liabilities are estimated to be between $1 billion and $10 billion, filed for Chapter 11 bankruptcy protection on January 19.
Read more: https://thenewscrypto.com/fhlb-led-billions-of-dollars-to-the-most-prominent-crypto-banks/
Text source: TheNewsCrypto – Blockchain & Cryptocurrency News M
