Kraken Financial Secures Federal Reserve Master Account as Category III Institution with One-Year Limited Term

Kraken said on March 4 that its Wyoming-registered bank, Kraken Financial, has obtained a Federal Reserve master account, giving the cryptocurrency company direct U.S. dollar settlement access to the Fed's core payment infrastructure and removing the need to route payments through partner banks. The Federal Reserve confirmed the bank has been approved as a Category III institution and may open a restricted-purpose account with an initial term of one year, which will serve as an early, real-world test of a payment-centric model separating access to settlement from the broader public safety net tied to the banking system. Under a prototype "payment account" framework outlined by the Federal Reserve, such accounts feature highly limited loan facilities with no interest, no access to the discount window or intraday credit, built-in overdraft controls, overnight balance caps at the lower of $500 million or 10% of total assets, and access confined to channels such as Fedwire Funds Service and FedNow, while excluding services like FedACH. Kraken co-CEO Arjun Sethi said the integration is designed to enable atomic settlement between fiat and cryptocurrency, combine institutional-grade cash management with digital asset custody, and support programmable financial products within a fully regulated structure, while the company's use of a Wyoming SPDI license with full-reserve requirements and a prohibition on lending customer fiat deposits illustrates how regulation can act as a competitive advantage in accessing U.S. payment rails.