Kraken's Banking License Play: Lithuania, Revolut's Path, and the Crypto-Bank Blur

Kraken is pursuing a full banking license in Europe, with Lithuania as the target jurisdiction, CoinDesk reported Tuesday, citing a person familiar with the plans. The exchange would follow the same regulatory path as fintech major Revolut, which obtained a specialized banking license from the Bank of Lithuania in 2018. That license allowed Revolut to offer current accounts, consumer lending, and stock trading across the European Economic Area.

A banking license would let Kraken hold deposits and offer lending and payments directly, rather than routing those services through partner banks. That structural shift deepens the blurring of lines between crypto exchanges and traditional financial institutions. Success would make Kraken the only cryptocurrency exchange to hold a full banking license anywhere in the world.

The European push is part of a broader licensing effort by Payward, Kraken's parent. In March, Kraken's banking arm won a Federal Reserve master account, granting direct access to the U.S. payment system. In May, Payward secured a virtual asset authorization in the United Arab Emirates. Speaking at Money 20/20 Europe, co-CEO Arjun Sethi said the plan for the next decade is to obtain licenses in each region, either by acquiring existing businesses or building from scratch.

Most crypto exchanges operate under e-money licenses, which allow them to store and transfer funds but not to lend or pay interest on deposits. A full banking license adds the ability to take deposits, extend credit, and issue payment instruments under a single regulatory umbrella. For Kraken, that means it could compete directly with banks for customer deposits, offering interest on balances and on-chain lending products without needing a third-party partner.

The operational advantage is concrete. Partner banks often impose caps on daily transaction volumes, charge fees for fiat on-ramps, and can change terms with little notice. A banking license removes those intermediaries, giving Kraken control over the full stack of cash management. That vertical integration improves margins and reduces dependency on traditional banking partners, a risk that has plagued crypto exchanges since the 2023 banking crisis.

The pursuit carries its own risks. Obtaining a banking license from the Bank of Lithuania is a multi-year process requiring a physical presence, a local management team, and compliance with European capital requirements and AML directives. Revolut's license took several years to secure. Kraken will also need to navigate the European Central Bank's oversight of systemically important financial institutions if its deposit base grows beyond certain thresholds.

The competitive implications are significant. If Kraken succeeds, other exchanges may feel pressure to pursue similar licenses, escalating the arms race for regulatory status. Exchanges that rely on partnership models – where a third-party bank holds customer funds – could see their value proposition eroded. Kraken's move also puts it in direct competition with neobanks and traditional lenders, raising the bar for product offerings beyond simple spot trading.

Kraken, founded in 2011, filed confidentially for a U.S. IPO last November alongside an $800 million raise that valued it at $20 billion. It reportedly paused those plans in March as market conditions weakened. The banking license push signals that the company is betting on regulated infrastructure as the long-term differentiator, even if the public listing timeline remains uncertain. Sethi's comment at Money 20/20 Europe captured the ambition: "The plan for the next decade is to obtain licenses in each region."