Banking Groups Slam Crypto Bank Kraken’s Fed Approval as Improper, Dangerous
Banking trade groups sharply criticized the Federal Reserve’s decision to grant crypto firm Kraken a master account, arguing it is risky and breaches the Fed’s own procedures. Kraken, now the first crypto bank with a Fed master account, gains access to the Fed’s payment systems, though with certain limitations such as no interest on reserves. This aligns with the Fed’s proposed “skinny” master account model for innovation-focused banks. Traditional banking organizations, including the Independent Community Bankers of America and the Bank Policy Institute (BPI), argue expanding Fed account access to nontraditional entities poses economic risks and claim the approval preempted the public comment process. The BPI contends the approval lacked transparency and adequate risk mitigation. The controversy highlights ongoing tensions between the banking sector and the crypto industry, including legislative disputes over stablecoin rewards. Former President Donald Trump has sided with crypto leaders, criticizing the banking sector for impeding related legislation in Congress.
