Kraken reaches FED master account and remains at the same level as banks

The Federal Reserve Bank of Kansas, in the United States, announced today, March 4, the approval of a limited purpose master account for Kraken Financial, the banking arm of the bitcoin (BTC) and cryptocurrency exchange Kraken.

This milestone makes the firm the first digital asset bank in the history of the United States in obtaining direct access to the payments infrastructure of the Federal Reserve (FED).

The authorization allows the entity, registered as Payward Financial, to operate under the Account Access Guidelines of the FED Board of Governors. By integrating directly into systems like FedwireKraken will eliminate the need for intermediary correspondent bankswhich will optimize transaction settlement and reduce operating costs for bitcoin users.

However, Kraken will not receive all the services available to traditional banks, as it will not generate interest on reserves nor will it be able to obtain emergency loans from the FED.

The approval is the result of more than five years of regulatory efforts and operational scrutiny. As a Wyoming Special Purpose Depository Institution (SPDI), Kraken Financial operates under a full reserve model, holding liquid assets that equal or exceed 100% of its customers’ fiat currency deposits.

Arjun Sethi, co-CEO of Payward and Kraken, highlighted the structural relevance of this advance:

«This milestone marks the convergence of digital asset infrastructure and sovereign financial rails. It allows us to operate not as a peripheral participant, but as a directly connected financial institution,» he said.

According to the company, this architecture will facilitate “atomic settlement” between fiat money and bitcoin in the future, as well as enabling institutional grade cash management integrated with digital asset custody. Initially, Kraken will implement a gradual rollout focused on facilitating the activity of its institutional clients.

The decision by the Federal Reserve Bank of Kansas, classifying Kraken as a Level 3 entity, comes at a transformative time for the American payments system. Jeff Schmid, president of the Kansas FED, noted that, in the face of a constantly evolving landscape, the integrity and stability of the system remains the priority.

This progress occurs despite the resistance of influential banking groups such as the Bank Policy Institute (BPI), which recently requested to establish a 12-month period before integrating cryptocurrency firms into the federal system, as reported by NoticiasVE. The traditional banking sector has expressed concern about liquidity risks, although Kraken’s total reserve model seeks to mitigate precisely these types of vulnerabilities.

Information in development…