Kraken has obtained a “master account” with the Federal Reserve, giving its banking arm direct access to the Fed’s core payments system and making it the first cryptocurrency company to operate on the same track as traditional financial institutions.
The company said its subsidiary Kraken Financial has received approval for a “master account” from the Federal Reserve, the Wall Street Journal reported. The account allows direct access to Fedwire, a major interbank payments network that processes trillions of transfers every day.
Until now, Kraken had to rely on partner banks to send or receive U.S. dollars. The change to direct access could speed up deposits and withdrawals for large traders and institutional clients as firms can now settle payments themselves.
Kraken Financial operates under a Wyoming charter designed specifically for cryptocurrency banks. The Federal Reserve Bank of Kansas City oversees the application.
However, the scope of approval is limited. Kraken will not have access to the full suite of services offered by traditional banks because it will not be able to earn interest on its reserves or tap into emergency loans from the Federal Reserve.
Kraken, a cryptocurrency exchange founded in 2011, has been slowly moving toward an initial public offering (IPO). Several of its competitors, including Gemini, Coinbase and CoinDesk parent Bullish, have already made their public market debuts.
Its parent company Payward has been on an acquisition spree, adding token management platform Magna to its fold last month. Last year, it acquired the U.S. futures trading platform NinjaTrader for $1.5 billion and the U.S. authorized derivatives trading platform Small Exchange for $100 million.
It also entered the tokenization space with the acquisition of tokenized stock specialist Backed Finance, the publisher of xStocks.
