Crypto24 May, 20263 min read
Kraken Financial Gets Federal Reserve Master Account in Kansas City, Connects to Fedwire and FedACH
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Kraken Financial obtained a Federal Reserve master account in Kansas City. It can directly connect to Fedwire and FedACH, like a traditional bank.
Fed rails meet crypto
The Federal Reserve published an updated proposal for a "skinny" master account, while President Donald Trump signed executive orders directing greater integration of digital assets with existing payment networks and directing the Treasury Department and regulators to strengthen Bank Secrecy Act regulations. CoinDesk tied the policy push to the Fed’s plan to grant fintech and crypto firms access to its payment rails without requiring them to be full fledged, Office of the Comptroller of the Currency-chartered banks. In a separate development, Kraken Financial was granted a master account in the Federal Reserve district in Kansas City, enabling it to connect directly to Fedwire and FedACH payment infrastructures like a traditional bank.
Zonebourse described the practical effect as allowing Kraken Financial to settle payments in central-bank money without going through an intermediary bank, and said the Fedwire network moves nearly $4 trillion USD every day between financial institutions. La Tribune framed the Kraken decision as a turning point, saying the master account lets a bank settle payments in central-bank money and manage liquidity "All of this without going through another intermediary bank".
Political and regulatory pressure
CoinDesk reported that one Trump executive order directed federal regulators to review existing policies to evaluate how they regulate financial institutions and identify rules that might block fintech firms from partnering with regulated entities. CoinDesk also quoted Trump’s order on national security and public safety risks, including an advisory that notes "payroll tax evasion," shell companies and "the strategic use of unregistered money services businesses" to facilitate "off-the-books" wage payments. In the same CoinDesk report, Nicholas Anthony of the Cato Institute said the guidance is in the hands of the Treasury and that Treasury can apply it "to whoever it sees fit" under the Bank Secrecy Act.
Meanwhile, Bitcoin News said Bitcoin reached an intraday high of $87,470 at 8:00 PM ET on Wednesday, March 19, 2025, during the Fed meeting, with political and regulatory factors cited alongside expectations that officials would keep interest rates unchanged. Bitcoin News added that U.S. spot Bitcoin ETFs recorded $209 million in net inflows on March 18 and that North Carolina lawmakers proposed a bill allowing state funds to allocate up to 10% to Bitcoin.
Who benefits, who resists
Zonebourse said Kraken’s direct Fed account reduces dependence on correspondent banks and allows Kraken to transfer USD quickly from one account to another via Fedwire, which it said should lower cost and speed settlement for institutional clients. La Tribune described the agreement as a first between a crypto-focused bank chartered by Wyoming and the financial institution that handles an average of $4.6 trillion per day through the Fedwire system. Zonebourse also reported that the decision was not universally welcomed, noting that traditional banks represented by the Bank Policy Institute voiced concerns about the Fed ruling without a finalized framework and about transparency of risk controls.
“This milestone marks the convergence of crypto infrastructure and sovereign financial rails.”
La Tribune quoted Arjun Sethi, co-CEO of Payward and Kraken, saying, "This milestone marks the convergence of crypto infrastructure and sovereign financial rails." In the CoinDesk report, the Senate Banking Committee voted to advance the Clarity Act, and CoinDesk said the Senate left town for the Memorial Day recess without voting on a reconciliation bill to fund the Department of Homeland Security, among other things.