Kraken wins Fed approval for a ‘master account’… “first crypto company”

US cryptocurrency exchange Kraken has secured approval for a ‘master account’ with the Federal Reserve (Fed).

Kraken co-CEO Arjun Sethi said in an interview with The Wall Street Journal (WSJ) on the 4th (local time) that the company recently received approval for a master account. A master account refers to access to the Fed’s core payment systems.

Kraken is the first cryptocurrency company to obtain Fed approval for a master account. The Wall Street Journal reported that “Kraken has become the first cryptocurrency company able to transfer funds through the same systems used by thousands of banks and credit unions,” calling the approval “a major win for the crypto industry, which had been denied access to the Fed system for years.”

With the approval, Kraken will be able to directly access the Fed’s interbank payment system, Fedwire. CEO Sethi said, “(This approval) will improve reliability and efficiency in the flow of fiat-currency-based deposits into and out of the digital-asset market.”

However, the master account approved for Kraken is reportedly limited in some functions. The Wall Street Journal said, “The limited master account approval granted to Kraken is similar to the ‘skinny’ master account concept proposed by the Federal Reserve Board late last year,” adding, “Under the concept, fintech and crypto companies could use the Fed’s payment systems but would not have access to other functions provided to banks, such as discount window loans.”

Meanwhile, US crypto companies are accelerating their push into traditional finance. Earlier, the Office of the Comptroller of the Currency (OCC) approved plans by five crypto companies—including dollar stablecoin issuer Circle (USDC) and XRP issuer Ripple—to establish trust banks last year.