Kraken wins federal reserve payment access through banking unit

The Federal Reserve opened its payment rails to crypto after Kraken won direct access through its banking unit. That puts Kraken on the same routes used by U.S. banks and credit unions. The Fed approved a master account for Kraken Financial, letting the unit move dollars without an intermediary bank. The company said the setup will enable faster transfers for large clients and traders who move cash between bank accounts and digital-asset markets. Kraken Financial taps Fedwire directly With the master account, Kraken Financial connects to Fedwire, an interbank system that handles more than $4 trillion in daily fund transfers right now. The unit previously used partner banks to route payments to other firms. The approval is limited. Kraken is not getting the range of Fed services that banks receive, including interest paid on reserves held at the central bank. Still, crypto firms have chased Fed access for years and often got rejected. Sen. Cynthia Lummis (R., Wyo.) called it “a watershed milestone in the history of digital assets.” Kraken Financial operates under a Wyoming state bank charter designed for crypto companies. The Federal Reserve Bank of Kansas City oversaw the application. Kansas City and Kraken announced the decision on Wednesday after The Wall Street Journal reported it first. Kraken’s legal name is Payward. “It improves reliability and efficiency for moving fiat deposits in and out of digital-asset markets,” said Arjun Sethi, co-chief executive of Kraken. Trump pushes crypto bills as banks warn of risks Under Donald Trump, the industry’s outlook has brightened. Trump has said he wants the U.S. to be the “crypto capital of the world,” reversing the Biden administration’s chilly stance. He has installed crypto-friendly regulators and backed legislation to build a regulatory framework, while his sons and associates have pursued crypto ventures. President Donald Trump posted that the Genius Act is being “threatened and undermined by the Banks” and said that is “unacceptable.” Trump wrote the U.S. needs “Market Structure done, ASAP” and added, “We are not going to allow it.” He also warned the crypto agenda could “end up going to China, and other Countries” if the Clarity Act is not handled. Trump said banks are trying to undercut the Genius Act, and he will not let them do it. He said Americans should “earn more money on their money.” He said banks are hitting record profits, and he accused them of using that power to weaken what he called a U.S. crypto agenda. Trump framed the Genius Act as the first big step toward making the United States the “crypto capital of the world,” then he called passing the Clarity Act the next step to finish the job. He said the reason to pass it is to keep the industry in the country. Trump said banks should not hold the Clarity Act hostage and should not try to undercut the Genius Act. He told banks to make a deal with the crypto industry because he said that it is in the best interest of the American people. He also said this industry “cannot be taken from the People of America” because he thinks it is close to being truly successful The limited access granted to Kraken Financial resembles the Fed governors’ “skinny” master account concept from late last year. That proposal would let payment fintechs and crypto firms use Fed payment rails, but block bank-only tools like the Fed’s discount window lending facility. Traditional banks have objected. Last month, the Bank Policy Institute and other trade groups said even limited access could threaten the U.S. payments system and financial stability. Crypto companies are also seeking greenlights from Trump’s regulators to compete more directly with banks. The smartest crypto minds already read our newsletter. Want in? Join them .