Kraken Becomes the First Native Crypto Firm to Secure a Fed Master Account

ChainCatcher report: Cryptocurrency journalist Eleanor Terrett posted on social media that Kraken, the second-largest cryptocurrency exchange in the U.S., has just achieved something no other crypto company has ever done—gained 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 Federal Reserve. This marks the first time a native cryptocurrency 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 enables Kraken to directly access the Federal Reserve’s payment infrastructure, but does not grant access to Federal Reserve lending facilities. The company may hold reserves and settle transactions using central bank funds, but cannot extend loans, utilize the discount window, or operate as a traditional commercial bank. According to sources, Kraken’s approval is being treated as a pilot program 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 Federal Reserve master accounts. Custodia Bank, Anchorage, and Ripple’s U.S. banking partner have already submitted applications.