Catenaa, Thursday, April 02, 2026-House Financial Services Ranking Member Maxine Waters sent a letter Thursday to Kansas City Federal Reserve President Jeff Schmid, seeking full disclosure by April 10 on Kraken Financial’s March 4 master account approval, the first granted to a crypto-native firm, including Fedwire and ACH access, restrictions, and risk assessments.
Kraken Financial, a Wyoming SPDI subsidiary of Payward, gained direct access to Fed payment rails without FDIC coverage or lending, contrasting prior denials like Custodia Bank in 2023. The one-year pilot, dubbed a “skinny” Tier 3 account, excludes liquidity facilities. Fed Vice Chair Michelle Bowman described it as a learning exercise with intervention rights. Waters challenges the Kansas Fed’s reliance on business confidentiality, citing systemic importance of crypto firms’ access to central bank settlement networks.
Tier 3 access is limited: Fedwire and ACH capabilities operate under experimental conditions. Kraken’s $1.2 billion daily volume tests the full-reserve SPDI model at scale, while pending applications from Coinbase and Gemini could follow depending on the outcome. The Bank Policy Institute criticized the process for ignoring public comments and maintaining opaque risk oversight.
Waters’ letter demands: precise Fedwire and ACH functionality, AML/consumer protection evaluations, and documentation of statutory compliance. The Fed’s response could normalize crypto payment rails, trigger congressional hearings, or impose hybrid restrictions. Kraken’s access accelerates potential 24/7 settlement versus standard banking hours, affecting $3.5 trillion daily Fedwire flows and $2 trillion monthly ACH volumes. Institutional adoption could unlock $200 billion in custody services.
The pilot coincides with Kraken’s planned IPO and a $50 billion AUM milestone in Q2 2026. Policy clarity will influence whether other SPDI or traditional crypto banks gain comparable access or seek offshore alternatives. Banking lobby groups including ABA and BPI warn of systemic risk contagion, lobbying $18 million in Q1 2026 for a master account moratorium.
Analysts note Wyoming SPDI charters allow fully reserved custody without lending, differing from national trust or OCC-chartered banks. Kraken’s approval highlights regulatory inconsistency, as prior applicants like Custodia litigated denials. Waters’ scrutiny could set precedent for crypto banking oversight and congressional leverage over Fed independence.
Globally, Singapore and UAE have operational equivalents via MAS and RAKBANK, while U.S. crypto banking remains experimental. Industry observers emphasize the pilot’s impact on institutional liquidity, tokenization, and adoption of stablecoins and digital assets.
Wyoming SPDI framework, created in 2019, enables six active crypto custodians, including Kraken and Avanti. Master accounts anchor liquidity, settlements, and institutional credibility. The Kansas City Fed supervises Kraken Financial’s pilot, capping $5 billion daily volumes with enhanced BSA/AML reporting. Waters previously scrutinized Custodia in 2023; the current probe tests the balance between congressional oversight and Fed independence, with the Tier 3 experiment potentially shaping U.S. crypto banking for the next decade.
