Analysis: Kraken's Approval for Fed Master Account a Historic Breakthrough for Crypto Industry, May Trigger Wave of Crypto Firm Applications

BlockBeats News, March 4th, Crypto reporter Eleanor Terrett posted on social media, stating, "The second-largest U.S. cryptocurrency exchange Kraken has just accomplished something no crypto company has done before—obtained key access from the Federal Reserve. Kraken's banking arm, Kraken Financial, has received approval from the Kansas City Fed to open an account with the Federal Reserve. This marks the first time a native crypto company has obtained (albeit limited) direct access to the Federal Reserve's payment system. This approval comes after Kraken submitted its application to the Kansas City Fed in October 2020, a five and a half year process."

This account allows Kraken direct access to the Federal Reserve's payment system, but does not include access to Federal Reserve lending tools. The company can hold reserves and settle transactions with central bank funds. However, it cannot make 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, long excluded from the traditional banking system, and signals a shift in the Federal Reserve's attitude. This move may trigger a wave of other crypto companies applying for Federal Reserve master accounts. Custodia Bank, Anchorage, and Ripple's U.S. bank partners have all applied for master accounts."