Kraken Financial has secured a limited-purpose Federal Reserve master account, becoming the first crypto-native firm to gain direct access to the central bank’s payment rails. The account allows the exchange’s banking arm to process fiat deposits and withdrawals without third-party intermediaries, marking a rare step by the Fed to integrate a digital asset institution into the core U.S. payments system.
Kraken Financial, the banking subsidiary of crypto exchange Kraken, has been granted a limited-purpose master account by the Federal Reserve Bank of Kansas City. This approval allows the firm to process fiat transactions for digital-asset markets directly through the Fed’s infrastructure, eliminating the need for intermediary banks.
The account was approved under the Federal Reserve’s Account Access Guidelines following a review of Kraken Financial’s business model and risk profile. It is granted for an initial one-year term and includes restrictions tailored to the company’s operations.
Kansas City Fed President Jeff Schmid stated that the approval reflects the evolving payments landscape while prioritizing system stability. The Fed emphasized that Kraken Financial is classified as a Tier 3 entity, subjecting it to enhanced scrutiny and ongoing supervision by both the Fed and Wyoming regulators.
Kraken co-CEO Arjun Sethi called the development a significant milestone, noting it demonstrates regulated crypto firms can meet the same standards as traditional banks for payment system access. This decision contrasts with the Fed’s 2023 denial of a similar application from Custodia Bank, highlighting its case-by-case approach.
The approval enables Kraken’s Wyoming-chartered special purpose depository institution to settle fiat transfers itself. This direct access is intended to improve the reliability and efficiency of settlement for digital-asset trading activities.
