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. In the most recent development, crypto lender Genesis filed for Chapter 11 bankruptcy protection on Jan. 19, having liabilities estimated between $1 billion and $10 billion.

Source: Wall Street Journal January 22, 2023 07:56 UTC