Kraken Fed Account Stalled Months After Historic Approval

The approval came as a one-year pilot with undisclosed conditions tailored to the bank's risk profile. Those limitations have drawn scrutiny. Representative Maxine Waters questioned the legal basis for the limited-purpose account and whether Kraken can access services such as ACH payments or earn interest on Fed balances.

Kraken received approval as a Tier 3 applicant, a category covering state-chartered banks without federal deposit insurance or a federal banking regulator. Such approvals are rare. Federal Reserve Vice Chair for Supervision Michelle Bowman described Tier 3 access as nearly impossible to obtain. Fintech analyst Jason Mikula noted that only three of 53 Tier 3 or unclassified applicants have ever received approval, with Kraken the only crypto-related institution.

The Fed is finalizing new rules governing payment account access for non-bank institutions. Public comments on the proposal close on July 27. Governor Christopher Waller expects final regulations by the end of the year. Kraken's experience could shape how the Fed handles future applications, including Ripple's pending request for a master account.