Kraken Wins U.S. Federal Reserve Master Account in First for Crypto Banking

Kraken has become the first crypto asset bank in U.S. history to receive a Federal Reserve master account.

The approval was given to its Wyoming-based bank, Kraken Financial. This lets Kraken connect directly to the Federal Reserve’s payment system, including Fedwire, and send U.S. dollar payments without using other banks as middlemen.

Key Points

• Kraken becomes first U.S. crypto bank to secure a Federal Reserve master account.

• Kraken Financial now has direct access to U.S. payment rails, including Fedwire.

• Approval was overseen by the Federal Reserve Bank of Kansas City after years of review.

• It strengthens Kraken’s institutional offering ahead of a potential public listing.

Direct Access to U.S. Payment Rails

Until now, Kraken had to depend on correspondent banking partners to process dollar deposits and withdrawals. With a Fed master account, Kraken can connect directly to the U.S. payments system. This could speed up transfers for institutional clients and large traders.

Notably, the master account is overseen by the Federal Reserve Bank of Kansas City, which supervised the application process. The approval follows more than five years of regulatory engagement and scrutiny.

However, the access is limited. Kraken Financial will not receive the whole range of services open to traditional banks. For instance, it will not gain interest on reserves at the Fed. Moreover, it will not have access to the Fed’s emergency lending facilities.

Milestone for Wyoming’s SPDI Model

Kraken Financial is set up as a Wyoming Special Purpose Depository Institution (SPDI), a type of bank created for digital asset companies. It follows a full-reserve model, meaning it keeps liquid assets equal to or more than 100% of customer cash deposits.

Arjun Sethi, co-CEO of Kraken and its parent company Payward, said this approval brings crypto systems closer to the traditional U.S. financial system. With direct access to the Federal Reserve, Kraken can function as a fully connected bank instead of relying on other banks.

The company believes this setup could eventually allow instant settlement between cash and crypto, combined with cash management and crypto custody, and programmable financial products — all within a regulated system.

Phased Rollout

Kraken Financial will introduce its new features step by step. At first, it will focus on improving U.S. dollar settlements for institutional clients on the Kraken platform. Later, it plans deeper integration with its parent company, Payward, and will work alongside regulators.

Notably, Kraken is one of the world’s longest-running crypto exchanges, founded in 2011. Recently, it has expanded by acquiring Small Exchange, NinjaTrader, and Backed Finance to grow its futures, derivatives, and tokenization businesses.

Ultimately, the Federal Reserve master account approval boosts Kraken’s appeal to institutional clients, especially as the company is preparing for a possible public listing.

More broadly, this shows a shift in the crypto industry: instead of building separate systems, digital asset companies are now connecting directly to the core U.S. financial system.