US banks gave $15m in loans to crypto-friendly companies

0



The devastating effects of the ongoing crypto winter are taking their toll on crypto-centric companies. The US Federal Home Loan Bank (FHLB) system was found to bail out funds for crypto-friendly banks. So far, the bank has already given out over $15 million.

Signature and Silvergate receive advances from the FHLB 

Signature and Silvergate are crypto-friendly institutions battling for survival amidst the crypto winter. Recently, the duo of Signature and Silvergate have been losing their funds and investors due to their ties with the defunct FTX exchange and Almeda associates. 

According to Protos, the two have received advance funding from the FHLB. 

From 2021 to 2022, Signature bailouts climbed from $2.63 billion to $11.28 billion, with around $50 million in New York’s FHLB shares.

Silvergate did not receive loans in 2021, but in 2022 it was offered $4.3 billion. Moreover, the value of Silvergate shares in the FHLB of San Francisco increased from $19 million in 2021 to nearly $25 million in 2022. 

Silvergate and Signature stock prices have plummeted 75% and 20% since November, respectively.

What is the Federal Home Loan Bank?

The FHLB was created during the wake of the great depression and currently consists of 7000 members scattered in all its independently operating 11 partner banks across the united states. Each of these banks acts backstop for each other when loans go bad. 

The FHLB bank is meant to fund residential housing members, community financial systems, small farms and businesses. It has a very robust credit rating that allows the bank to facilitate low-interest loans, advances, and dividends for stakeholders. 

To receive an advance from the FHLB, the entity must be a member of any FHLB associates and hold a certain amount of stocks in the FHLB system.

Recently, the bank has described itself as a liquidity provider that raises funds for global markets by lending out this money in advance. The FHLB gets its funding not from taxpayers but from private entities sanctioned by the government and then regulated by congress. 

Follow Us on Google News

You might also like
Leave A Reply

Your email address will not be published.

You have not selected any currency to display
Translate »