Kraken Financial is the first crypto bank connected to the US central bank infrastructure
- Kraken Financial, licensed bank of the crypto company Payward, has become the first digital asset institution in the USA to receive a federal master account from the US Central Bank.
- This means that Kraken is on a par with “normal” commercial banks in many respects, for example with direct access to the real-time interbank service Fedwire, which eliminates the need for correspondent banks and reduces costs.
Kraken can use the master account Financial transactions directly through the Federal Reserve Bank and handle their channels. This reduces complexity, costs and dependencies and significantly improves the quality of service for institutional customers.
The system now available strengthens the company’s institutional orientation as it enables more efficient payment processing. Kraken will not shut down the existing infrastructure overnight and use the new one, but will proceed gradually, in close coordination with regulators, to avoid mistakes.
SPDI model with limited privileges
Kraken Financial operates as a Special Purpose Depository Institution (SPDI) in Wyoming and follows a full reserve model where liquid assets always cover at least 100% of customer deposits.
The approval of the Federal Master Account is limited to one year and comes with specific restrictions that correspond to the risk profile of the institution. Unlike traditional banks, Kraken does not gain access to emergency loans or interest on reserves.
The US Central Bank manages this form of access as a “limited purpose account”, which is primarily used for payment processing. Nevertheless, the decision is considered significant progress because it marks the first step toward the use of federal financial structures by a private company. It can be considered certain that more will follow.
Crypto for the first time in state financial infrastructure
Arjun Sethi, co-CEO of Payward and Kraken, described the approval as a turning point that shows the convergence of crypto infrastructure and state financial infrastructure.
With direct access to the Federal Reserve, Kraken will no longer be able to act as a peripheral player but as a fully connected financial institution.
In the future, this opens up direct settlement between fiat and crypto, institutional cash management in conjunction with digital custody and programmable financial products.
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