Two crypto-friendly US banks have borrowed at least $13.6 billion from Federal Home Loan (FHL) Banks to deal with a tidal wave of customer withdrawals amid the digital asset bear market, according to a new report from the Wall Street Journal (WSJ).
The FHL Bank System was created by the Federal Home Loan Bank Act of 1932.
It’s a government-sponsored banking system designed to support mortgage lending and community investment.
The Wall Street Journal reports that crypto-friendly Signature Bank borrowed $10 billion from its local FHLBank in the fourth quarter of 2022. That figure represents the largest FHL loan by any bank in the past three years.
Signature Bank’s deposits reportedly dropped from nearly $103 billion to less than $89 billion in 2022.
Additionally, Silvergate Capital borrowed “at least” $3.6 billion, according to the WSJ. The bank, which became a publicly traded company in 2019, recently announced it lost $1 billion in the last three months of last year’s bear market alone.
Silvergate is known for handling digital assets and enables exchanges, institutions, and traders to exchange crypto for fiat currencies.
Though the markets have been difficult, Silvergate told the WSJ earlier this month that it still believes in cryptocurrencies.
“While Silvergate is taking decisive action to navigate the current environment, its mission has not changed. Silvergate believes in the digital asset industry.”
Signature, by contrast, has been reportedly working to reduce its crypto deposit exposure.
Says Eric Howell, the bank’s chief operating officer,
“There’s still some runoff left to go in crypto. For the next couple of quarters, we’ll have to use higher-cost borrowings to replace deposits.”
Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inboxCheck Price Action
Follow us on Twitter, Facebook and Telegram
Surf The Daily Hodl Mix
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Generated Image: Midjourney
