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