Kraken Wins Fed Master Account With ₱29.23 billion ($500 million) Overnight Cap
Kraken Financial, Wyoming's first bank to gain Federal Reserve master account approval, can now settle dollars directly inside the Fed system. The one-year account comes with strict limits: a ₱29.23 billion ($500 million) overnight balance cap, no discount window access, and blocked FedACH services.
Key Takeaway
Kraken's Fed access is real but restricted — a policy test that keeps crypto at arm's length from the central bank safety net.
Kraken's Wyoming-chartered bank secured a Federal Reserve master account on March 4, giving the exchange direct access to dollar settlement inside the Fed system.
The approval came with hard limits. Kraken Financial can't hold more than ₱29.23 billion ($500 million) overnight or 10% of total assets, whichever is lower. The account carries a one-year term, pays no interest, and blocks access to the discount window and intraday credit. Kraken can only use Fedwire Funds and FedNow — FedACH is off the table.
Kansas City Fed President Jeff Schmid framed the move as cautious experimentation, saying the payments landscape is evolving and the integrity and stability of the US payments system remain the priority. The Fed classified Kraken as a Tier 3 entity with a limited-purpose account, a designation that keeps the bank closer to a controlled policy test than a full embrace of open access.
Kraken Co-CEO Arjun Sethi pitched the account as infrastructure maturation. This architecture could enable atomic settlement between fiat and crypto, institutional-grade cash management integrated with digital asset custody, and programmable financial products built within a fully regulated framework. Wyoming's Special Purpose Depository Institution charter requires Kraken Financial to stay fully reserved and bars lending customer assets.
The Fed floated a prototype Payment Account concept in December 2025, designed to give nontraditional institutions limited settlement access without tapping the central bank safety net. Fed Governor Christopher Waller said those streamlined accounts include overdraft prevention controls and no discount window access, with operational deployment targeted for late 2026.
Kraken's approval follows months of regulatory thaw. The exchange attended a White House Digital Asset Summit in January 2025, the day after President Trump signed an executive order on digital financial technology, alongside representatives from Gemini and Coinbase. By April 2025, the Justice Department had disbanded its National Cryptocurrency Enforcement Team, removing the final regulatory barriers that had delayed Kraken's Federal Reserve application by over a year.
This article was written based on reporting from CryptoSlate.
