Kraken Becomes First Crypto Firm to Secure a Federal Reserve Master Account

TLDR:

• Kraken Financial received a Federal Reserve master account from the Kansas City Fed after a five-year application process. 
• The skinny master account lets Kraken settle in central bank money but bars lending or discount window access entirely. 
• The approval serves as a pilot for Fed Governor Christopher Waller’s limited-purpose master account framework due this year. 
• Custodia Bank, Anchorage, and Ripple’s U.S. banking partner are among crypto firms now eyeing similar Federal Reserve access.

Kraken, the second-largest crypto exchange in the United States, has secured a Federal Reserve master account. The approval marks the first time a crypto-native company has gained direct access to the Fed’s payments system.

Kraken’s banking arm, Kraken Financial, received clearance from the Kansas City Fed. This came five and a half years after Kraken filed its application in October 2020, representing a turning point for the digital asset industry.

A Limited-Purpose Account With Strict Boundaries

The account operates under what is called a “skinny” master account framework. Fed Governor Christopher Waller has championed this model.

He aims to finalize the proposal by year’s end. The Kraken approval is designed as a “pilot” to test this new concept in practice.

Under the framework, Kraken can hold reserves and settle in central bank money. However, the firm cannot lend or access the Fed’s discount window.

It also cannot operate as a traditional commercial bank. The account grants direct access to the Fed’s payments rails, and nothing further.

Journalist Eleanor Terrett reported on X that the skinny master account model mirrors similar structures abroad. Central banks in the United Kingdom, the European Union, and Switzerland already offer payments-only accounts.

The U.S. framework closely aligns with those existing models. This positions the country closer to global standards for integrating digital assets.

The Walter Bloomberg account on X noted that the approval covers Kraken’s Wyoming entity, Kraken Financial. The firm can now settle transactions on Fedwire without a banking intermediary.

The account carries a one-year initial term and comes with specific restrictions. This reflects the Fed’s careful, step-by-step approach toward crypto integration.

Other Crypto Firms Now Eye Federal Reserve Access

The Kraken approval is expected to trigger a wave of new master account applications from crypto companies. Wyoming-based Custodia Bank has been pursuing access for nearly as long as Kraken.

Custodia has also been in active litigation against the Fed since 2022. The outcome of Kraken’s pilot program may shape how the Fed handles Custodia’s pending case.

Anchorage, an OCC-regulated trust bank, has separately applied for a Federal Reserve master account. Ripple’s U.S. banking partner is also among those that have submitted applications.

These filings reflect a broader effort by crypto firms to connect directly with U.S. payment infrastructure. Banks have historically resisted this movement, making Kraken’s approval particularly notable.

The decision carries added weight for Wyoming’s regulatory standing. It suggests the Fed views Wyoming’s special purpose depository institution rules as meeting federal banking standards.

That recognition may encourage other states to develop similar frameworks. It could also lead to faster review timelines for future applicants seeking master account access.

The approval also points to a shift in tone at the Federal Reserve toward the crypto sector. Critics had previously described the Fed as hostile to digital assets under the prior administration.

That posture appears to be changing, though the Fed remains cautious. How Kraken’s pilot program performs will likely shape crypto’s next chapter with the traditional financial system.

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