- Kraken becomes the first crypto firm with direct Fedwire and FedNow access, bypassing traditional banking intermediaries.
- Maxine Waters demands answers, questioning how Kraken gained approval faster than Custodia Bank.
- The move signals a major shift toward crypto integration with the Fed system, despite growing regulatory tension.
On March 4, the Kansas City Fed handed Kraken Financial a limited-purpose master account. The Wyoming-chartered arm of the exchange now plugs straight into the Federal Reserve’s payment rails for one year. This means no more middlemen for USD settlements.
Following this approval, Kraken now flexes as the first digital-asset player to score direct Fedwire and FedNow access.
Rep. Maxine Waters Demands Answers from Kansas City Fed
Nevertheless, Kraken’s red tape win has landed it in trouble as Rep. Maxine Waters fired off a letter on March 26, wanting the Kansas City Fed to explain by April 10 exactly how a crypto exchange cleared the bar faster than a chartered bank.
This inquiry followed the realization that Custodia Bank, another Wyoming SPDI, had sought the same access since 2020. The bank just lost its final 7-3 appeal in the 10th Circuit on March 13.
Five years of regulatory trench warfare ended with a flat denial, leaving regulators unsettled.
The quoted line in the letter cuts straight: “Explain how a crypto exchange got approved faster than a chartered bank.” Waters has demanded a full written breakdown of the approval process and risk controls.
This incident reveals two things: the old gatekeepers still hold cards, and the Fed has started testing the waters for non-banks.
What Direct Fed Access Means for Crypto
Aside from regulatory scrutiny, this move has already rewritten the playbook. Kraken has gained efficient, low-cost settlement without relying on correspondent banks that have de-banked crypto firms before.
Industry watchers say this pilot could become the template once the Fed finalizes its broader “skinny” account framework later this year.
Direct Fed rails cut friction and costs that have dogged crypto for years. Although banks are pushing back hard, warning of risks, the approval stands, with the passage of the CLARITY Act likely next week. Crypto has moved from outsider to insider in one quiet decision.
The April 10 deadline now looms. Waters and the House Financial Services Committee have put the Kansas City Fed on notice. Whatever the written response says, one thing is clear: the bridge between crypto and the Fed payment system has officially opened.
