Crypto-Mastermind summary:

  • The top 5 crypto exchange Kraken has received an application in the US state of Wyoming, thus being approved as SPDI-bank.

  • This will make Kraken Financial the first regulated U.S. bank allowed to offer comprehensive services in the management of digital assets. In addition to pure custody and transactions, the bank plans to offer debit cards as well as invoice payment and salary transfer in cryptocurrencies in the future.

  • With this license, Kraken can operate as a bank in all states of the USA and does not have to fear obstacles from other regional regulations.

Two days ago the crypto-exchange Kraken had announced, that it has received approval for its application to the Wyoming Banking Board. This gives the company official approval to operate as a SPDI bank (Special Purpose Depository Institution) in the future. This will be implemented with the subsidiary Kraken Financial. The crypto company will be the first digital asset company in the U.S. to receive a banking charter recognized under federal and state law. With this step, Kraken enables even less technology-oriented investors to enter cryptocurrencies. Access will also be easier for institutional investors.

What may Kraken implement as a bank?

With this decision, Kraken Financial will be the first regulated bank in the U.S. to be allowed to offer qualified custody, payment transactions and other comprehensive services for digital assets. Customers will also be able to switch quickly and easily between Fiat- and crypto-money. Krakens financial director David Kinitsky said:

„By becoming a bank we get direct access to federal payments infrastructure, and we can more seamlessly integrate banking and funding options for customers.”

Kinitsky was previously part of Grayscale and Fidelity Investments, and is now working with Kraken to further expand digital asset services. As a state-chartered bank, Kraken also has the ability to operate in multiple jurisdictions and does not have to follow individual states. This opens up many opportunities, as Kinitsky says:

„We would expect to offer a host of new products as we get established. Those will range from things like qualified custody for institutions, digital-asset debit cards and savings accounts all the way to new types of asset classes. We can engage with securities and commodities and things like that as a bank. So a lot more TBD there.“

With this license, however, Kraken is considered a custodian bank. This means that the crypto-exchange is not allowed to grant loans from clients‘ investment funds. Also, the reserves of digital assets are to be managed in accordance with Wyoming state law. The bank must keep 100% of its assets in reserve. Even if the bank should go bankrupt, the assets must be returned to the customers. And a trust company can claim its assets from a judge during bankruptcy.

The company also plans to offer services after the bank is launched, allowing customers to pay their bills directly in cryptocurrencies. Salaries shall also be paid in crypto.


The next steps for Kraken

The crypto-company was founded in 2011 and for a long time acted as an exchange for cryptocurrencies. In 2019, Kraken bought the company Crypto Facilities, thus expanding its offer to include crypto-futures. With a daily trading volume of approximately $ 7.5 billion including derivatives trading, the exchange is one of the five largest trading platforms in the crypto-sector.

With the new license, Kraken intends to focus on building operations and personnel for the bank. Kinitsky wants to organize 10 to 25 department heads for the launch. Marco Santori, Kraken’s Chief Legal Officer, let his enthusiasm run wild on Twitter:

„Kraken just won approval to create America’s first crypto bank. World, please meet Kraken Financial. Kraken Financial, world. Wait, a what? Kraken is a BANK?! How did this even happen?!“

But it will still take some time until the amount of planned new functions is fully implemented. There is talk of starting the processes next year.

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