Kraken wins Fed master account
Crypto exchange Kraken’s Wyoming-chartered bank spinoff was granted a Federal Reserve master account, giving it access to Fedwire and the ability to hold balances at the Fed while leaving out interest on reserves, emergency lending and FedNow access. Banks warned that this creates a novel channel for non-traditional firms to touch core settlement rails, shifting the debate from abstract charter fights to concrete infrastructure and control questions. (reuters.com) (financefeeds.com)
Kraken just got a door into the plumbing of the United States financial system that most crypto firms have never had: a Federal Reserve master account through its Wyoming bank, Payward Financial, doing business as Kraken Financial. The approval came from the Federal Reserve Bank of Kansas City on March 4, 2026. (kansascityfed.org) A master account is the ledger a bank uses to hold balances at a Federal Reserve Bank and settle obligations on Federal Reserve payment rails. With one, Kraken Financial can connect directly to Fedwire instead of sending wholesale payments through another bank first. (frbservices.org) (kansascityfed.org) This is not a normal bank account at the central bank. Reuters reported that Kraken can hold limited overnight balances and use Fedwire, but it cannot earn interest on reserve balances, use the Federal Reserve’s emergency lending, or access FedNow or automated clearing house services. (reuters.com) The bank that got the account is not Kraken’s exchange itself. It is a Wyoming-chartered special purpose depository institution, which Wyoming describes as a fully reserved bank designed for custody and related services, with a focus on digital assets. (wyomingbankingdivision.wyo.gov) “Fully reserved” is the key design choice here. Wyoming’s model does not let these institutions do the standard bank trick of taking short-term deposits and turning them into longer-term loans, which is why the state pitched them as a safer bridge between crypto firms and dollar payments. (wyomingbankingdivision.wyo.gov) The fight over who gets a master account has been going on for years because a master account is not just a convenience. It is direct access to the settlement layer that sits underneath banks, and the Federal Reserve finalized special account-access guidelines in August 2022 after a long debate over how to review novel institutions. (federalreserve.gov) (federalregister.gov) Those guidelines use a tiered approach that applies more scrutiny to firms with unusual business models or special charters. In plain English, the Federal Reserve created a separate rulebook for applicants that do not look like ordinary federally insured banks. (federalreserve.gov) (federalregister.gov) Kraken’s approval matters because it turns that old legal argument into an operating reality. A crypto-native company now has a live, if restricted, path to move money on the same wholesale rail used by banks and credit unions, without paying an intermediary bank to stand in the middle. (reuters.com) (bankingdive.com) Banks are objecting because the restriction list does not erase the precedent. Reuters reported that banking groups warned this could open a channel for nontraditional firms to reach core payment infrastructure, raising questions about liquidity stress, anti-money-laundering controls, and how far central-bank access should extend beyond conventional banks. (reuters.com) (financefeeds.com) The one-year term attached to the limited account is another sign that this is still an experiment, not a blanket opening of the gates. If Kraken operates inside the limits without major problems, every future applicant with a special charter will point to this case first. (consumerfinancialserviceslawmonitor.com) (kansascityfed.org)
