Kraken Wins Direct Access to the Fed’s Payment System - Unchained

Kraken has secured something crypto firms have chased for years. Its banking arm has been granted a Federal Reserve master account, giving the company direct access to Fedwire, the central bank’s core payment network used by banks to move money across the financial system.

The approval means Kraken Financial can settle U.S. dollar transfers on the same rails that traditional banks use, rather than relying on intermediary institutions. That should speed up fiat deposits and withdrawals for institutional and professional trading clients.

A Fed master account allows regulated institutions to hold balances directly at the central bank and send payments through the Fed’s real time settlement infrastructure. Kraken’s version comes with limits, including no interest on reserves, resembling the “skinny” master account model the Fed discussed last year.

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Still, the milestone is significant. Previous attempts by crypto focused banks, including Custodia, were rejected by regulators and courts. Kraken co-CEO Arjun Sethi said the access allows the firm to operate “as a directly connected financial institution,” marking another step in crypto’s push to plug into the core plumbing of the U.S. financial system.