Kraken wins Fed master account approval, a first for the crypto industry

Kraken’s banking division has obtained a Federal Reserve “master account,” giving the crypto company direct access to Fedwire, the U.S. central bank’s core interbank payment system used by thousands of banks and credit unions to move money.

The approval will allow Kraken Financial — its banking unit — to transfer funds over the same rails that underpin high-value dollar settlement across the traditional financial system, speeding up fiat movements for institutional and professional trading clients.

Fedwire, operated by the Federal Reserve Banks, is a real-time gross settlement system designed for immediate, final payments between participating institutions, making it a prized link for firms that want to reduce reliance on intermediary banks for clearing and settlement.

Rather than routing dollar transfers through intermediary banks, Kraken can now connect straight into the Fed’s payment infrastructure. However, the account does not include the full suite of central-bank services available to conventional banks, such as earning interest on reserves. “With a Federal Reserve master account, we can operate not as a peripheral participant in the U.S. banking system, but as a directly connected financial institution,” Kraken co-CEO Arjun Sethi said in a statement.

IPO plans and business expansion

Kraken’s banking arm traces back to the exchange’s Wyoming chartering effort, when the firm moved to create a state-regulated entity aimed at bridging crypto markets and traditional payments infrastructure. Sethi added that today’s update should pave the way for delivering instant fiat-crypto settlement, combining institutional cash management with secure custody, and building programmable financial services inside a regulated structure. “This is what it looks like when crypto infrastructure matures into core financial infrastructure,” he said.

The regulatory victory lands in a policy and legal landscape that has been hostile to similar bids in the past.

Custodia Bank, another Wyoming-chartered institution that pursued Fed access for a crypto-focused model, lost its push for a master account after U.S. courts upheld the Federal Reserve’s discretion to deny the request.

The timing also intersects with a broader shift in Washington’s posture toward digital assets, including an intensifying debate over stablecoins, payment rails, and whether crypto firms offering bank-like products should be forced into bank-like rules — a theme JPMorgan CEO Jamie Dimon weighed in on this week.

Winning a Fed master account could also carry weight in capital markets. Payward Inc., Kraken’s parent, filed confidentially for a U.S. IPO in November and has been broadening its footprint through acquisitions, including NinjaTrader, Small Exchange, Backed Finance, and Magna.