Kraken secures Federal Reserve master account in crypto banking breakthrough

The US cryptocurrency sector has taken a notable step into the traditional financial system after Kraken obtained direct access to the Federal Reserve’s core payment infrastructure.

The approval allows the exchange’s banking arm to move funds through the same channels used by regulated financial institutions, marking a rare development in the relationship between digital asset firms and US regulators.

According to a report by The Wall Street Journal on Wednesday, Kraken Financial has secured a Federal Reserve master account, granting it access to the central bank’s payment systems.

The Federal Reserve Bank of Kansas City oversaw the application process, and the approval is expected to be formally announced the same day by both the regional Fed bank and Kraken, which operates under the Payward name.

The decision follows years of attempts by crypto companies seeking direct connectivity with the central bank’s infrastructure.

Access to Fed payments

A master account allows financial institutions to connect directly to the Federal Reserve’s payment networks, which handle transfers between banks and credit unions across the US.

With the approval, Kraken Financial can move funds using the same settlement rails used by traditional financial institutions.

This removes the need for intermediary banks when transferring money through the central bank’s systems.

Access to these networks is seen as a major operational advantage.

For crypto firms, direct connectivity can simplify settlement processes and reduce reliance on third party banking partners.

Kraken’s banking division was created to provide regulated financial services tied to digital assets.

Securing a master account places the platform within infrastructure that underpins the US banking system, although its permissions remain more limited than those granted to licensed banks.

Limits remain

Despite the significance of the development, the approval does not grant Kraken Financial the full set of services offered to traditional banks.

According to the report, the company will not receive interest payments on reserves held at the Federal Reserve.

Those payments are usually available to banks that maintain balances at the central bank.

Industry push

Several companies in the digital asset industry have tried to obtain a Federal Reserve master account in recent years.

One of the most prominent efforts has come from Custodia Bank, led by Caitlin Long.

The Wyoming based institution intensified its campaign in late 2025 by filing a court petition aimed at securing access to the central bank’s payment systems.

Policy signal

The approval has also sparked discussion about a potential shift in regulatory attitudes toward the crypto industry.

Journalist Eleanor Terrett highlighted the development in a post on X, describing the decision as a historic shift for digital asset companies operating in the US financial system.

Her post also noted that the move suggests the Federal Reserve considers Kraken to have adequate anti-money laundering and sanctions compliance systems in place to address illicit finance risks.

The decision also signals recognition of Wyoming’s regulatory structure for special-purpose depository institutions, indicating that the framework aligns with broader federal banking standards.