WSJ: Crypto banks borrow billions from mortgage banks

Last Updated: 23 January 2023

Cash flows in the world of cryptocurrency are under pressure. Many traditional banks do not do business with the big players in the industry for various reasons. They therefore rely on banks like Silvergate and Signature Bank. Both banks are popular in the crypto world. But that also comes with drawbacks. In times of dire need, people knock on banks’ doors.

Silvergate could painfully cough up over $8.1 billion to meet demand. The turmoil surrounding FTX in the market made many parties want to withdraw money. Another example is Signature Bank, where the amount involved was even around $10 billion. According to the Wall Street Journal, the banks used the system set up in the United States in the 1930s. The original purpose? The idea was to make the process for mortgages easier. So apparently today, banks like Signature Bank and Silvergate are also finding their way to these lenders.

Federal Home Loan Banks lend relatively cheaply compared to the rest of the banking world. During the violent falls in 2022 and the collapse of several companies, the demand for liquidity was high.

  • Ivan Brightly

    Ivan Brightly is a leading cryptocurrency analyst and author with over 5 years of experience in the blockchain and digital asset space. He previously served as a senior analyst at a major cryptocurrency hedge fund where he led quantitative research and trading strategy development.

    Ivan holds a Master's degree in Finance from the London School of Economics and a Bachelor's in Computer Science from Stanford University. He is frequently invited to speak at fintech and blockchain conferences worldwide on topics spanning cryptocurrency trading, blockchain technology, and the future of digital assets.

    Ivan's commentary has been featured in several major finance and technology publications including Forbes, Bloomberg, and CoinDesk. He is considered one of the most insightful voices analyzing new developments in the cryptocurrency and blockchain industry.

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