Kraken Financial Receives Federal Reserve Master Account Approval

Kraken Financial, the banking arm of Kraken, received approval from the Federal Reserve Bank of Kansas City to open a master account at the Federal Reserve after submitting its application in October 2020, crypto journalist Eleanor Terrett reported on March 4. The decision grants the U.S.' second-largest crypto exchange direct but limited access to the Federal Reserve payment system, allowing it to hold reserves and settle transactions in central bank funds while barring access to lending facilities, the discount window, and traditional commercial banking activities. Sources cited in the report describe the authorization as a "pilot" to trial this new model for a native crypto company, a development characterized as historically significant for a sector long kept at arm's length from the banking system. The move is seen as a potential catalyst for further applications for Federal Reserve master accounts from other crypto firms, with Custodia Bank, Anchorage, and Ripple's U.S. banking partner already having filed requests.