The United States Federal Home Loan Banks System (FHLB) is lending billions of dollars to two of the largest cryptocurrency banks in an effort to mitigate the effects of a surge in withdrawals, according to a report from The Wall Street Journal on Jan.
21. The FHLB is a consortium of 11 regional banks across the United States that provide funds to other banks and lenders. Founded during the Great Depression to support housing finance, the system has $1.1 trillion in assets and over 6,500 members.
Traditional finance has remained immune to crypto contagion following the collapse of FTX, but FHLB loans to crypto-exposed banks could increase that risk, notes the report.The entity reportedly lent nearly $10 billion to commercial bank Signature Bank in the last quarter of 2022, making it one of the largest borrowing transactions by a bank in recent years.
In 2018, the Signature received approval from the Department of Financial Services of New York for its blockchain-based digital platform.The second bank to requeste funds from the FHLB was Silvergate, receiving at least $3.6 billion.Read more on cointelegraph.com