Banks Push Back After Fed Grants Kraken Financial Access to Payment Rails

• Kraken Financial received a Federal Reserve master account from the Federal Reserve Bank of Kansas City on March 4, becoming the first digital asset firm to gain direct access to Fedwire.
• The Bank Policy Institute, representing JPMorgan Chase, Bank of America, Wells Fargo, and Goldman Sachs, said the approval “front-runs” a formal policy framework the Fed has yet to finalise.
• The Independent Community Bankers of America warned the decision creates a two-tiered system in which crypto-focused institutions access payment rails without the same regulatory oversight applied to chartered banks.

US banking trade groups criticised the Federal Reserve’s decision to grant Kraken Financial direct access to the central bank’s payment system, arguing the move bypasses regulatory safeguards and pre-empts a policy framework that has not yet been finalised.

The Federal Reserve Bank of Kansas City approved a master account for Kraken Financial, the Wyoming-chartered banking arm of crypto exchange Kraken, on March 4. The account allows the firm to settle payments directly through Fedwire, the Federal Reserve’s interbank network that processes trillions of dollars in daily transfers.

Banking industry groups said the approval was premature because the Federal Reserve Board is still developing rules for granting accounts to nontraditional financial institutions.

Banking Groups Challenge Approval Process

The Bank Policy Institute (BPI), whose members include JPMorgan Chase, Bank of America, Wells Fargo and Goldman Sachs, said it was “deeply concerned” that the Kansas City Fed acted before the central bank completed its rulemaking process.

The group argued the decision effectively sidestepped the public consultation underway on how Reserve Banks should handle applications from institutions outside the traditional banking system.

The Independent Community Bankers of America (ICBA) raised similar concerns. The organisation said master account access should remain limited to banks subject to federal deposit insurance, capital requirements and consumer protection rules, standards that do not apply to Wyoming’s Special Purpose Depository Institutions (SPDIs).

Kraken Financial operates under that state framework, which requires institutions to maintain liquid assets equal to or exceeding 100% of client fiat deposits. The model effectively prohibits lending and requires full reserves against deposits.

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Direct Access to Fedwire

The master account gives Kraken Financial the ability to settle US dollar transactions directly through Fedwire rather than relying on intermediary banks. That removes a longstanding operational constraint for crypto-native firms that depend on traditional banking partners for payment settlement.

The approval does come with restrictions, however. Kraken Financial cannot earn interest on reserves held at the Federal Reserve and does not have access to the central bank’s emergency lending facilities. 

These conditions align with the Federal Reserve’s proposed “skinny master account” model, introduced in December 2025 to handle applications from specialised institutions.

That framework has not yet been formally adopted.

The development comes as Congress debates stablecoin legislation (more specifically, the GENIUS Act), including whether issuers should be allowed to earn interest on Federal Reserve reserves.

President Trump recently sided with crypto-industry positions on that question, deepening tensions with banking lobby groups that view both issues as interconnected.

Read more: Jamie Dimon Warns Stablecoin Yield Fight Could Threaten US Financial System

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