US Crisis: $100B Emergency Loan Usage Highlights Crypto Scrutiny

Recent data reveals that the Federal Reserve’s Bank Term Funding Program (BTFP) has reached a milestone of $100 billion in usage, indicating continued financial assistance to banks and highlighting the persistent nature of the U.S. banking crisis. The program has consistently experienced high utilization for five consecutive weeks, reinforcing its significance in providing vital support to financial institutions.

For the fifth consecutive week, Fed lending to banks through the Bank Term Funding Program has edged up to a new high, hitting $100 billion as of Wednesday https://t.co/RDWYE9C63v pic.twitter.com/p5hPUujLK2

— Nick Timiraos (@NickTimiraos) June 8, 2023

Launched in March 2023, the BTFP was designed to provide eligible depository institutions with additional funding. Market analyst Joe Consorti highlighted the significance of the new funding program, stating that it enables banks to “receive par for their devalued assets in secret.”

The program’s primary objective is to ensure that banks possess the necessary resources to meet the demands of all their depositors, effectively functioning as a form of banking bailout. By allowing banks to mitigate the impact of devalued assets through confidential transactions, the program seeks to enhance the stability and liquidity of the banking system.

Furthermore, the recent crackdown on Binance and Coinbase was seen as a likely attempt to curb the growth of the crypto industry in the US. This has raised concerns about whether it is connected to the high utilization of emergency loans.

These crackdowns on cryptocurrency have sparked mixed reactions. Some people believe that the crackdowns are necessary to protect investors from fraud and prevent the use of cryptocurrency for illegal activities. Others believe that the crackdowns are excessive and will stifle innovation in the cryptocurrency industry. The underlying reason for the continuous scrutiny remains unclear, but it is worth noting that securities regulators have viewed cryptocurrencies as a potential threat to traditional financial institutions.

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