Fed grants limited-purpose account to digital asset bank

The Federal Reserve Bank of Kansas City announced Wednesday it has approved a limited-purpose account for Kraken Financial, a digital asset financial institution. This is the first time this type of financial bank has been granted a limited form of master account access

“The Federal Reserve’s decision to grant limited master account access to Kraken Financial underscores the importance of transparency and clear process when evaluating novel requests for access to Federal Reserve services. America’s Credit Unions has supported the development of consistent guidelines and thoughtful safeguards to address potential risks associated with new types of applicants,” said Scott Simpson, America’s Credit Unions president/CEO.

“At the same time, moving forward before the Board of Governors has completed its review of comments on the proposed Payment Account Prototype raises questions about how these evolving frameworks will ultimately be applied. Additional clarity around the scope of the access granted would also be helpful, particularly given the Board’s own discussion of how certain account features, such as borrowing privileges like the discount window or intraday credit, could increase risk to the Reserve Banks,” he added. “As the Federal Reserve continues evaluating these issues, transparency and consistent application of policy will be essential to maintaining confidence in the process.”

The Federal Board of Governors is considering officially establishing a prototype limited-access account, and America’s Credit Unions filed comments last month on the risks the proposal addresses and additional concerns.