Bank groups ‘deeply concerned’ after Fed grants Kraken master account

Major U.S. banking industry groups, including the Bank Policy Institute (BPI) and the Independent Community Bankers of America (ICBA), expressed deep concern following the Federal Reserve Bank of Kansas City's approval of a master account for Kraken Financial. They argue this move grants a crypto-focused institution access to the central bank's payment rails without the full regulatory safeguards applied to traditional banks, especially since the Fed has not yet finalized its policy framework for these "skinny" or "limited purpose" master accounts.

The BPI specifically criticized the lack of transparency in the approval process and the risk mitigants imposed. ICBA's CEO stated that granting nonbank entities access to these traditionally limited accounts poses risks to the banking system. The decision comes while the Federal Reserve is still developing a broader framework for these limited-access accounts, which provide payment system access but exclude services like interest on balances or discount window borrowing. Conversely, some crypto market participants view Kraken's approval as a significant step, signaling a potential opening for building non-deposit banking businesses.

(Source：The Block)