ChainThink reports that on March 4, crypto journalist Eleanor Terrett posted on social media: “Kraken, the second-largest crypto exchange in the U.S., has just accomplished something no other crypto company has ever achieved—gaining critical access to the Federal Reserve. Kraken’s banking division, Kraken Financial, has been approved by the Federal Reserve Bank of Kansas City to open a master account at the Fed. This is the first time a native crypto company has been granted (albeit with limited permissions) direct access to the Federal Reserve’s payment system. The approval comes five and a half years after Kraken submitted its application to the Federal Reserve Bank of Kansas City in October 2020.”
This account allows Kraken direct access to the Federal Reserve payment system, but does not include access to Federal Reserve lending facilities. The company may hold reserves and settle transactions using central bank funds, but it cannot extend loans, use the discount window, or operate as a traditional commercial bank.
According to sources, Kraken’s approval is being viewed as a “pilot” project to test this new model. The decision holds historic significance for the cryptocurrency industry, which has long been excluded from the traditional banking system, and signals a shift in the Federal Reserve’s stance. This move could trigger a wave of applications from other crypto companies seeking a Federal Reserve master account. Custodia Bank, Anchorage, and Ripple’s U.S. banking partner have already applied for master accounts.