Kraken Bank Applies for Federal Reserve Master Account Access

On July 12, 2021, Kraken Bank submitted an application to the Federal Reserve for a master account, which would grant the crypto-focused institution direct access to the Fed's payment systems and services. Kraken Bank had previously obtained a Special Purpose Depository Institution (SPDI) charter from the state of Wyoming, a novel charter type designed to accommodate digital asset businesses. A Fed master account would allow Kraken Bank to hold reserves at the central bank and access the Fedwire and ACH payment networks directly, rather than relying on correspondent banking relationships.

The application was significant because it tested whether non-traditional chartered institutions, particularly those focused on cryptocurrency, could gain the same infrastructure access as conventional banks. The request remained pending throughout 2021 and became emblematic of broader regulatory uncertainty around fintech and crypto firms' roles in the banking system. The outcome had major implications for the BaaS ecosystem, as direct Fed access could reduce fintechs' reliance on traditional bank partners for payment processing.

The application also spurred policy discussions at the Federal Reserve about establishing clearer guidelines for evaluating master account requests from novel charter holders.