The Wyoming-chartered bank won a first-of-its-kind Federal Reserve account in March, but CEO Brian Mathena said it is still being operationalized as scrutiny over its limits and practical use persists.
Kraken Financial’s Federal Reserve master account is still not live more than four months after it was approved, CEO Brian Mathena told Wyoming lawmakers last week. The Wyoming-chartered bank became the first crypto firm to win a Fed account on March 4, after waiting since October 2020, but it is still working to make the account operational and expand its deposit product. A Fed master account gives a bank direct access to the central bank’s payment rails, allowing U.S. dollar transfers without relying on a correspondent bank. For Kraken, that could eventually mean direct settlement on Fedwire rather than routing client funds through an intermediary. For now, customer wire transfers still go through Dart Bank, which Kraken lists as its U.S. dollar wire provider. Mathena said the bank is playing catch-up as it works through uncertainty around the account. Kraken had already signaled in March that any launch would be phased, beginning with larger institutional clients. The approval itself was unusual: the Federal Reserve Bank of Kansas City granted the account for one year only and with undisclosed limits tailored to Kraken’s risks. The arrangement has drawn political and regulatory scrutiny. Representative Maxine Waters questioned Kansas City Fed President Jeff Schmid in March, saying the term “limited purpose account” does not appear in law or Federal Reserve guidance and asking whether Kraken would be allowed to use the ACH network or earn interest on balances. The practical reach of the account remains unclear while those limits are not public. Kraken applied as a Tier 3 firm, the Fed category for state-chartered banks without federal insurance or a federal supervisor, where approvals are rare. Fed Vice Chair for Supervision Michelle Bowman signaled in March how difficult such approvals are to obtain. With Kraken also advancing a confidential IPO filing, a fully operational Fed account could become an important part of the infrastructure story it presents to investors.