Kraken, the second-largest US crypto exchange, has reportedly secured access to the Federal Reserve’s (Fed) core payment systems, marking a major milestone as the first crypto company to operate on the same infrastructure used by thousands of banks and credit unions.
Kraken is a huge win for the crypto industry
On Wednesday, Kraken’s banking arm, Kraken Financial, became the first crypto firm to have direct access to the Federal Reserve’s main payment system after gaining approval from the Kansas City Fed for a main Fed account, the Wall Street Journal (WSJ) reported.
According to a report on Wednesday, the unit of Kraken, which has a special charter of the state bank of Wyoming, designed specifically for crypto companies, does not accept the full range of services available to banks, such as paying interest on reserves held at the central bank.
However, this milestone is a huge victory for the crypto industry, which has been denied access to the Fed system for years. The company previously relied on intermediary banks to facilitate transfers to other companies.
The company told the WSJ that approval of the Fed’s main account will allow Kraken Financial to “consume transactions faster and more seamlessly for large clients and professional traders.” Additionally, it gives Kraken’s banking unit direct access to Fedwire, a major interbank payment system that processes more than $4 trillion in transfers per day.
Arjun Sethi, co-CEO of Kraken, told the WSJ that direct access to the Fed’s payment rails “improves the reliability and efficiency of fiat deposit transfers in digital asset markets and beyond.”
Meanwhile, Kansas City Federal President Jeff Schmid highlighted the ongoing evolution of the payments landscape in a statement cited by Reuters. “Throughout this transition, the integrity and stability of the US payment system remains our priority,” he said.
The main account of Kraken Financial has been approved for a period of one year, according to the news media.
Banks block crypto company’s access to federal rails
Kraken’s limited access to the master account is similar to the “lean” master account concept first proposed by the Federal Reserve Board in October 2025.
The proposal gives payments fintechs and crypto companies access to the Fed’s payment rails, but excludes other benefits more consistent with banks, including its discount window lending option.
This has raised serious concerns among traditional banks, which have voiced their opposition to giving crypto and fintech companies direct access to the Fed’s payment systems, warning that even limited access could pose serious risks to the US payments system and overall financial stability.
In a joint letter, the Bank Policy Institute (BPI), the Clearing House Association (TCHPA) and the Financial Services Forum (FSF) called for a 12-month waiting period before companies can apply for payment accounts. Banking groups argued that the Fed “should block access until licensed stablecoin issuers prove they can operate securely.”
Meanwhile, the American Bankers Association (ABA) last month asked the Office of the Comptroller of the Currency (OCC) to delay approving applications for crypto bank charters, suggesting the agency should wait until regulatory uncertainty is resolved.
In December, the OCC approved conditional banking charters for Ripple, Circle, BitGo, Paxos, and Fidelity. The approval raised concerns that it could blur the lines between banking activities and lead to regulatory arbitrage.
The banking lobby raised concerns about the uncertainty of emerging business models, the need for greater transparency in the application of statutes and decision-making processes, and the lack of ultimate federal oversight.
Ultimately, the ABA proposed not to complete the review process until Congress, which would ultimately regulate many of the OCC’s most recent charter applicants.
The total crypto market capitalization is at $2.39 trillion in the one-week chart. Source: TOTAL on TradingView
Featured image from Unsplash.com, Chart from TradingView.com
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