The United States Federal Home Loan Banks System (FHLB) is giving billions of dollars to two of the largest cryptocurrency banks in an effort to reduce the effects of the increase in the dollar back, accordingly in a report from the Wall Street Journal on January 21.
The FHLB is an association of 11 regional banks in the United States that provide funds to other banks and make loans. Founded during the Great Depression to support housing, the system has $1.1 million in assets and more than 6,500 members.
Traditional funds have remained immune to the crypto crisis after the FTX crash, but FHLB loans to crypto-exposed banks could increase that risk, the report notes. .
The company reported close to $10 billion in commercial bank Signature Bank in the last quarter of 2022, making it one of the largest loan transactions by a bank in recent years. In 2018, the Signature received approval from the New York Department of Financial Services for its blockchain technology platform.
The second bank to request money from the FHLB was Silvergate, receiving at least $3.6 billion. In the last quarter of 2022, Silvergate received more cash flows and took steps to stabilize cash flow, including the sale of debt securities. Of the loss attributable to common stockholders during the period it raised $1 billion, Cointelegraph reported.
According to Silvergate’s report, the average consumer deposits in the fourth quarter of 2022 was $7.3 billion, a very low amount compared to the first quarter when deposits reached the $ 12 billion.
In comments to the WSJ, Senator Elizabeth Warren said that “this is why I warned about the dangers of allowing crypto in relation to the banking system,” and said that people should not Taxpayers then “leave the bag for the collapse of the crypto. industry”, which he called a market full of “fraud, official money and illegal money.”
The collapse of the FTX group caused an impact on the crypto industry, affecting many companies. In recent development, crypto loaner Genesis file for Chapter 11 bankruptcy protection on January 19, with liabilities estimated between $1 billion and $10 billion.