Rich by Coin

The Federal Reserve Bank of Kansas City approved Kraken Financial’s limited-purpose master account, granting direct access to Fedwire for settling U.S. dollar transactions for an initial one-year term. Kraken becomes the first digital asset bank in U.S. history to gain direct access to the Federal Reserve’s payment infrastructure, tied to its Wyoming SPDI charter. The arrangement uses a skinny payment account prototype designed to clear and settle the institution’s payment activity; it does not pay interest, prohibits daylight overdrafts, and blocks access to the Fed’s discount window.

Traditional banking groups warned that granting uninsured cryptocurrency firms direct access to central-bank rails bypasses ongoing rulemaking and could introduce illicit-finance and systemic risks. Brooke Ybarra of the American Bankers Association said, “This action puts the cart so far ahead, that the horse will never be able to catch up.” The Bank Policy Institute likewise argued the move front-runs the Board’s public comment process and raises anti-money-laundering concerns given uninsured participants.

Kraken’s milestone comes amid a broader regulatory thaw toward crypto policy. The decision follows the Securities and Exchange Commission’s dismissal of its civil enforcement action against Kraken last year, a development supporters say signals a more permissive climate for regulated crypto firms. Kraken co-CEO Arjun Sethi described the move as the convergence of crypto infrastructure with sovereign financial rails, adding that Kraken will operate “not as a peripheral participant in the U.S. banking system, but as a directly connected financial institution.” The firm plans a phased rollout focused on institutional clients, with broader integration to come in coordination with regulators. The contrast with Custodia Bank, a rival Wyoming-chartered crypto institution denied a master account in 2023, highlights the evolving regulatory landscape.