Kraken Secures Fed Master Account in Historic First for Crypto Industry

Kraken has become the first cryptocurrency company to secure a Federal Reserve master account, giving its banking arm direct access to the same core payment infrastructure used by U.S. banks and credit unions to move money across the financial system.

As reported by the Wall Street Journal, Kraken Financial, the exchange’s Wyoming-chartered Special Purpose Depository Institution, will now be able to settle U.S. dollar transactions directly through the Fed’s infrastructure rather than routing through intermediary banks, a step that reduces counterparty risk and operational friction, particularly for institutional clients and professional traders.

The approval is limited in scope. Kraken will not earn interest on reserves held at the central bank and will not have access to the Fed’s emergency lending facilities — privileges that remain exclusive to traditional depository institutions. But the core gain is significant: direct access to Fedwire and other payment rails, the plumbing that underpins virtually every dollar transaction in the U.S. financial system.

A shift in how the Fed sees crypto

Journalist Eleanor Terrett, described the move as a “historic shift” for the crypto industry — and noted that what’s embedded in the approval matters as much as the approval itself. She wrote, “The decision impliedly recognizes that the Fed believes Kraken has sufficient anti-money laundering and sanctions compliance practices to curb illicit finance risk, and that Wyoming’s regulatory framework for special purpose depository institutions is in line with Federal banking standards.”

That’s a meaningful statement. For years, crypto companies operated under the shadow of what the industry called Operation Chokepoint 2.0 — a perception, backed by numerous accounts from founders, that regulators under the prior administration systematically worked to limit crypto firms’ access to banking services. Kraken itself spent years in the Fed’s application queue without resolution. Custodia Bank, another Wyoming SPDI that applied for a master account around the same time as Kraken, was denied in 2023 after the Federal Reserve Board ruled that Wyoming’s charter did not constitute a “bank” under federal law.

Senator Cynthia Lummis, one of the architects of Wyoming’s crypto banking framework and a long-time advocate for Kraken’s application, had previously described the Fed’s inaction as an illegal delay. The approval that arrived today represents the conclusion of a multi-year fight that ran through lawsuits, Senate letters, and a change in administration.

The six-year road to Fed access

Kraken has been building toward this moment since 2020, when it became the first digital asset company in U.S. history to receive a bank charter recognized under federal and state law — the Wyoming SPDI license that created Kraken Financial. That charter allowed it to offer regulated custody, deposit-taking, and fiduciary services for digital assets, but without a Fed master account it still had to rely on traditional bank intermediaries for dollar settlement.

The master account closes that gap. For large institutional clients and professional traders, the practical impact is faster deposits and withdrawals settled directly on Fed rails, without the latency and risk introduced by a correspondent bank in the middle.

What comes next is whether other crypto-focused financial institutions will now use the Kraken approval as a template. The Trump administration has made crypto-friendly regulation a stated policy priority, and the Fed’s decision signals that the institutional door, once effectively closed, is now open — at least for firms that can demonstrate the compliance infrastructure to walk through it.

Also Read: Trump Says Banks Are Threatening GENIUS Act as Coinbase Visits White House

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