Top House Democrat Questions Kansas City Fed’s Approval Of Kraken Master Account
House of Representatives Ranking Member Maxine Waters has pressed the Federal Reserve Bank of Kansas City over its approval of a “restricted function account” for Kraken, expressing considerations concerning the implications of granting a crypto agency entry to the Federal Reserve’s (Fed) fee system.
Rep. Waters Seeks Clarity On Kraken’s Master Account Approval
On Thursday, Representative Maxine Waters, the highest Democrat on the House Financial Services Committee, sent a letter to Jeff Schmid, President and CEO of the Federal Reserve Bank of Kansas City, questioning the Kansas City Fed’s latest choice to approve a “restricted function account” to the US’s second-largest crypto alternate, Kraken.
In the letter, Waters seeks clarification from the Kansas City Fed relating to the sensible implications of this approval “at a time when Congress has debated whether or not or to not develop entry to the Fed’s fee rails and on what phrases.”
Notably, Kraken Financial, Kraken’s banking arm, made historical past as the primary crypto firm to realize direct entry to the Federal Reserve’s core fee system. This achievement was achieved after Kraken secured approval from the Kansas City Fed for a Fed grasp account earlier this month.
As reported by Bitcoinist, the grasp account’s approval will allow Kraken Financial to expedite and streamline transactions for its giant shoppers {and professional} merchants. Additionally, it’ll grant Kraken’s banking unit direct entry to Fedwire, a distinguished interbank fee system that processes over $4 trillion in transfers every day.
The milestone represents a major triumph for the crypto trade, which had been repeatedly denied entry to the Federal Reserve system for years. Previously, the corporate had relied on middleman banks to facilitate transfers to different companies.
The lawmaker highlighted that granting a cryptocurrency agency entry to the Federal Reserve’s fee system for the primary time raises coverage, regulatory, and shopper safety considerations, arguing that it’s notably regarding given the fast tempo at which monetary innovation is outpacing the principles and safeguards designed to make sure the security of the monetary system.
The Kansas City Fed’s announcement doesn’t disclose particular details about Kraken’s entry to the vary of Federal Reserve monetary providers “as a result of confidentiality of enterprise info supplied by candidates.” However, the announcement raises questions concerning the approval as a result of neither statute nor the Federal Reserve Board’s Account Access Guidelines discuss with a ‘restricted function account’ sort.
Crypto Access To Fed’s Payment Rails Faces Opposition
Representative Waters emphasised that entry to the nation’s core funds infrastructure carries important public duty and shouldn’t be prolonged with out full transparency, clear authorized grounding, and confidence that dangers shall be correctly managed.
Therefore, she requested info no later than April 10, 2026, on the Federal Reserve providers that Kraken can now entry, the circumstances or restrictions that apply, and the prudential, anti-money laundering (AML), and shopper safety concerns that have been weighed earlier than continuing with the approval.
The lawmaker’s letter arrives as banking teams specific important considerations about granting crypto and fintech corporations direct entry to the Federal Reserve’s fee methods. Traditional banks have cautioned that even restricted entry may pose a considerable risk to the US fee system and total monetary stability.
For context, Kraken’s restricted entry to the grasp account is just like the “skinny” grasp account idea initially proposed by the Federal Reserve Board of Governors in October 2025.
This sort of restricted account would allow fee fintechs and crypto corporations to entry the Federal Reserve’s fee methods. However, it could exclude different benefits extra carefully related to banks, such because the low cost window lending facility.
In addition, the Office of the Comptroller of the Currency (OCC) authorised conditional financial institution charters for Ripple, Circle, BitGo, Paxos, and Fidelity in December, elevating considerations that it may blur the traces between banking actions and result in regulatory arbitrage.
Last month, the American Bankers Association (ABA) urged the principle banking regulator to postpone its approval of functions for crypto financial institution charters, suggesting that the company ought to wait till the regulatory uncertainties are resolved.
