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Kraken has secured direct access to the Federal Reserve’s payment infrastructure through its banking subsidiary, marking a first for a crypto-native firm seeking deeper integration with the traditional financial system.
The company confirmed that Kraken Financial, its Wyoming-chartered digital asset bank, has been granted a Federal Reserve master account by the Federal Reserve Bank of Kansas City. The approval allows Kraken to connect directly to core U.S. payment systems such as Fedwire, a real-time settlement network used by banks and financial institutions to move trillions of dollars each day.
With the master account, Kraken will be able to settle U.S. dollar payments without routing transactions through intermediary banks. Until now, the exchange had relied on partner banking institutions to handle fiat transfers.
Kraken executives described the decision as a structural step toward integrating crypto markets with the existing financial system.
“This milestone marks the convergence of crypto infrastructure and sovereign financial rails,” said Arjun Sethi, co-CEO of Kraken and its parent company, Payward. He added that the approval allows the firm to operate as a directly connected financial institution rather than relying on correspondent banking relationships.
A Limited But Symbolic Breakthrough
While the account grants Kraken access to the Fed’s payment rails, it does not provide the full benefits available to traditional banks.
Kraken will not earn interest on balances held at the Federal Reserve and will not have access to the central bank’s lending facilities. These limitations reflect ongoing regulatory caution around granting full banking privileges to crypto-native institutions.
Even with those restrictions, industry participants view the approval as a significant milestone for digital asset firms that have long sought direct access to the U.S. central bank’s settlement infrastructure.
Wyoming, where Kraken Financial holds its charter, has positioned itself as a hub for crypto-focused banking models through special-purpose depository institutions designed to bridge blockchain markets and the traditional financial system.
Sen. Cynthia Lummis, a Republican from Wyoming and a longtime digital asset advocate, described the approval as a “watershed milestone in the history of digital assets.”
Signals for the Broader Industry
Kraken’s approval arrives after years of debate around whether crypto institutions should be allowed to connect directly to the Federal Reserve’s payment backbone.
Several firms have pursued similar access in the past. Custodia Bank, another Wyoming-chartered crypto bank, sought a master account but was denied after a legal battle that reaffirmed the Federal Reserve’s discretion over approvals. Other industry participants, including Ripple, have also explored similar pathways.
Within policy discussions, regulators have considered the idea of so-called “skinny” master accounts. These arrangements would allow firms to access payment rails while withholding certain privileges granted to traditional depository institutions.
Under that model, digital asset firms could participate in core settlement systems without receiving the full regulatory treatment of banks.
Timing Amid IPO Plans
The development also comes as Kraken explores a potential public listing.
Parent company Payward Inc. has reportedly submitted a confidential draft registration statement to the U.S. Securities and Exchange Commission as part of preparations for a possible initial public offering.
Bart Hillerich
If the company proceeds with a listing, direct access to Federal Reserve payment rails could strengthen its position as a bridge between crypto markets and traditional finance.
