Recent developments at the US Federal Reserve indicate the adoption of digital assets at the highest level of the nation’s monetary system.
Kraken was recently the first crypto exchange to receive a primary account with the Federal Reserve.
The Fed may also be looking at a new crypto seat. US President Donald Trump on Wednesday nominated a pro-Bitcoin nominee for Senate consideration.
These developments mark a significant shift in how the Fed may approach the crypto industry. But there are also villains.
Why are Fed master calculations so important to the crypto industry?
On Wednesday, Kraken announced that its charter bank, Wyoming-based Kraken Financial, has been awarded a major Fed account. This made it “the first digital asset bank in US history to gain direct access to the Federal Reserve’s payments infrastructure.”
Kraken CEO Arjun Sethi said, “With the main Federal Reserve account, we can operate not as a peripheral participant in the US banking system, but as a direct financial institution.”
The main account represents access to the preferred form of money for financial institutions: dollars held directly in the Federal Reserve System.
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These dollars are widely perceived as risk-free. Aaron Brogan of Brogan Law, a firm specializing in digital assets, said they are “the internal architecture of the United States monetary system that can always do more.”
As the US dollar remains the world’s dominant currency, the best form of US dollar is the best. Other instruments like cash, dollars in FDIC-insured bank accounts, and bills are fine, but Fed dollars are the best.
According to Sethi, for an exchange like Kraken, “it improves the reliability and efficiency of transferring fiat deposits in digital markets and beyond”.
But not every financial institution has access, and certainly not the early disruptors of the cryptocurrency industry, at least not yet.
What are the main accounts of the Federal Reserve?
The Federal Reserve System is divided into 12 different banks. While these banks come together to make important policy decisions, each has a certain degree of autonomy.
In an effort to bring the federal system closer together, Congress passed the Monetary Control Act of 1980. The law gave all depository institutions access to federal reserve accounts. This was the beginning of the main account.
Julie Andersen Hill, dean of the University of Wyoming College of Law, wrote that Congress “intended that all depository institutions could use the Federal Reserve’s payment systems. The legislative history of the Monetary Control Act is littered with references to ‘open access’ to ‘all depository institutions’.”
However, as the banking industry changed, the Fed began to express preferences about who had access and how much. According to Brogan, three levels have been developed:
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Tier 1: Federally chartered banks with deposit insurance
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Tier 2: Federally chartered banks without deposit insurance
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Tier 3: State chartered banks
“Perhaps unsurprisingly, the Federal Reserve Board believes that Tier 1 banks should have access to the principal account, while Tier 3 banks are heavily regulated, and Tier 2 is somewhere in the middle,” he wrote.
The cryptocurrency industry has long had trouble finding banks willing to serve them. Those were often state-chartered banks that already had trouble accessing the federal system.
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The Fed doesn’t want to be too exclusive with key accounts. According to Thomas Kingsley, director of financial services policy at the American Action Forum, “During periods of stress, access to central bank settlement accounts can affect a firm’s ability to meet payment requirements. In this sense, access to a core account can reduce management risk relative to structures dependent on commercial bank deposits.”
However, the Fed also does not want to give access to any institution. Per Kingsley, “If a large non-bank with a major account experiences operational failure or disruption, the disruption will be closer to the core financial infrastructure.”
Enter a thin account. In October 2025, Fed Governor Christopher J. Waller proposed a new type of account that provides access to the Fed’s payment rails, but also controls certain risks while controlling the limits. There are:
This is what the Kraken achieved. It may be relatively limited, but it is a huge victory for the institutionalization of crypto. Pro-crypto senator Cynthia Lummis called it “a watershed moment in the history of digital assets.”
Bank groups return from the account
Not everyone is happy about it. Independent Bankers of America (ICBA) CEO Rebecca Romero Rainey wrote, “Allowing non-banks and crypto-assets access to key accounts poses a risk to the banking system.”
He said there are “significant risks to expanding direct access to the Fed account to institutions that operate outside the framework of traditional banking regulation.”
Bank Policy Research Fellow Paige Pidano Paridon said the BPI is “deeply concerned” that the Fed approved the “limited target” key account before the Federal Reserve Board has finalized its policy framework for those accounts.
He said the decision ignored public comment that the Fed sought on lean accounts and “was made without transparency in the approval or mitigation process to address the very significant risks it creates.”
A pro-crypto banker could soon lead the Fed
In addition to the US central bank issuing accounts to crypto exchanges, the bank itself may soon be led by a pro-crypto economist. On Wednesday, Trump nominated Kevin Warsh, the Shepard Family Distinguished Fellow in Economics at Stanford University’s Hoover Institution, to the Senate.
The White House is seeking a four-year term for Warsh as president and a 14-year term as governor.
Warsh, who served as the Fed’s governor under former US presidents George W. Bush and Barack Obama from 2006 to 2011, has made several pro-crypto statements in the recent past.
“Bitcoin doesn’t bother me,” he said in an interview in May 2025. He said that billionaire investor Marc Andreessen, “showed me a white paper (…) I wish I had clearly understood how transformative Bitcoin would be and this new technology. Bitcoin doesn’t bother me. I see it as an important asset that can inform politicians when they are doing the right thing and the wrong thing.”
Warsh’s candidacy may not be smooth sailing. Democratic lawmakers and central bank policy experts alike expressed concern over the Trump administration’s continued efforts to control the Fed.
Trump has been calling for interest rate cuts for months, but the Fed, currently chaired by Jerome Powell, has not followed through on his wishes.
In January, Trump’s Justice Department served the Federal Reserve with grand jury subpoenas and threatened to indict Powell on charges of misappropriating funds for the construction of an office building. Powell claimed that the real issue is that the Fed does not want to follow orders from the White House.
The US central bank is increasingly accepting cryptocurrency, a trend that is likely to continue with new, more favorable policies and pro-crypto leadership.
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