Kraken became the first crypto company to gain access to the Federal Reserve's core payment system, making it the first cryptocurrency company capable of transferring funds like a bank.

Kraken Financial, the banking arm of Kraken, has received approval from the Federal Reserve for a "master account," becoming the first crypto company to access the Fed's core payment system and gain access to the same payment channels as thousands of banks and credit unions. This account will allow Kraken Financial direct access to Fedwire, the interbank payment system that processes over $4 trillion in transactions daily; previously, the arm relied on intermediary banks for fund transfers. Kraken Financial holds a special banking license in Wyoming specifically for crypto companies, and this approval grants limited master account privileges, excluding all services enjoyed by banks, such as earning interest on reserves held at the Fed. The Federal Reserve Bank of Kansas City reviewed the application and announced its approval on Wednesday. Kraken co-CEO Arjun Sethi stated that this move will improve the reliability and efficiency of fiat currency deposits entering and leaving the digital asset market. Banking groups have criticized the decision. Paige Pidano Paridon, co-head of regulatory affairs at the Bank Policy Institute, stated that the decision lacks transparency in the approval process and risk mitigation measures. Kraken, founded in 2011, completed a funding round last November at a $20 billion valuation and has filed for an IPO. (WSJ)