Analysis: Kraken's Approval for Fed Master Account a Historic Milestone for the Crypto Industry, Potentially Triggering Wave of Crypto Institutional Applications

BlockBeats News, March 4th, Crypto reporter Eleanor Terrett posted on social media, saying, "The United States' second-largest cryptocurrency exchange Kraken has just accomplished something unprecedented in the crypto industry - obtaining key access to the Federal Reserve. Kraken's banking arm, Kraken Financial, has been approved by the Federal Reserve Bank of Kansas City to open a master account with the Fed. This marks the first time a native crypto company has gained (albeit limited) direct access to the Fed's payment system. This approval comes after Kraken submitted its application to the Federal Reserve Bank of Kansas City in October 2020, five and a half years ago."

This account allows Kraken to have direct access to the Federal Reserve's payment system, but does not include the right to use Federal Reserve lending tools. The company can hold reserves and settle in central bank money. However, it cannot issue loans, use the discount window, or operate as a traditional commercial bank.

According to sources, Kraken's approval is seen as a "pilot" project to test this new model. This decision holds historical significance for the crypto industry, which has long been excluded from the traditional banking system, and signals a shift in the Federal Reserve's stance. This move may trigger a wave of other crypto companies applying for Fed master accounts. Custodia Bank, Anchorage, and Ripple's U.S. banking partners have already applied for master accounts."