The Federal Reserve approved Kraken's master account status, prompting banking organizations to express "deep concerns."

US banking groups have strongly opposed the Federal Reserve's approval of master account status for crypto firm Kraken Financial, arguing that this could allow crypto firms to directly access the Fed's payment system without the same regulatory safeguards as traditional banks. A master account is a crucial channel for financial institutions to access the Fed's clearing and payment network. This approval means Kraken Financial can directly use the US central bank's payment infrastructure. The Bank Policy Institute expressed "deep concern," noting that the decision appears to have been made before the Fed finalized its policy framework. Currently, the Fed is still studying regulatory rules for so-called "skinny master accounts," which are typically for financial institutions that do not engage in traditional deposit and loan businesses. The institute also criticized the lack of transparency in the approval process, stating that the public has no access to the approval process and related risk mitigation measures. Meanwhile, some crypto industry supporters believe this decision could open the door for more financial institutions focused on payment services but not traditional banking models, allowing them direct access to the core payment network of the US financial system.