Kraken's Payward Financial Granted One-Year Limited Federal Reserve Account Access

Kraken's Wyoming-chartered banking subsidiary Payward Financial has been granted a one-year "limited purpose" Federal Reserve account as a Tier 3 participant, giving the crypto exchange provisional access to central bank payment rails, the Federal Reserve Bank of Kansas City announced. Kraken Co-CEO Arjun Sethi said the move shows crypto infrastructure evolving into core financial infrastructure, while analysts at TD Cowen and Capital Alpha argued the decision could be the first in a series of Fed approvals for crypto entities such as Circle, Anchorage and Custodia to secure master accounts, potentially including Fedwire access. U.S. community banks, represented by the Independent Community Bankers of America and the Bank Policy Institute, criticized the expansion of direct Fed access to firms outside traditional banking regulation and questioned the transparency and risk controls of the approval process. The Kansas City Fed said it will continue working with firms to balance payment system access with competitive neutrality and stability as the Federal Reserve Board develops new policies for so-called "skinny" master accounts.