Two of the biggest banks to cryptocurrency companies are rushing to stem a flood of customer withdrawals by borrowing billions of dollars from Federal Home Loan Banks, the system originally designed to support mortgage lending in the 1930s.
Signature Bank SBNY 7.47%increase; green up pointing triangle tapped its local home-loan bank for nearly $10 billion in the fourth quarter, among the largest such borrowings by any bank since early 2020, according to securities filings. Silvergate Capital Corp., SI 13.00%increase; green up pointing triangle a competing lender that shifted its business toward crypto a decade ago, received at least $3.6 billion. Silvergate saw total deposits from their digital asset customers plummet from $11.9 billion on Sept. 30 to just $3.8 billion on Dec. 31, company filings show. The Federal Home Loan Bank (FHLB) system is composed of 11 regional banks that are privately capitalized — that is, they receive no taxpayer assistance — and owned as cooperatives by their members, which include banks, credit unions, insurance companies and community development financial institutions.
