From Dubai to the Fed: Kraken Financial Becomes First Crypto Bank with Federal Reserve Account

Kraken Financial, the Wyoming-chartered banking arm of crypto exchange Kraken, has become the first U.S. digital-asset bank to gain access to the Federal Reserve’s payment system through a limited-purpose master account, as reported by The Wall Street Journal.

The account gives Kraken direct access to Fedwire, a major interbank payment network that handles trillions of dollars in daily transfers. While the privileges are narrower than those of full master accounts, the move is considered a significant milestone for crypto firms integrating into traditional financial infrastructure.

“This milestone marks the convergence of crypto infrastructure and sovereign financial rails,” said Arjun Sethi, Co-CEO of Payward, Kraken’s legal parent. “With a Federal Reserve master account, we can operate not as a peripheral participant, but as a directly connected financial institution.”

The account was approved for an initial one-year term, with services to be rolled out in phases, starting with support for institutional client activity. Analysts say the move strengthens Kraken’s appeal to institutional investors by reducing reliance on correspondent banks for U.S. dollar settlements.

Kraken’s Growth and UAE Presence

Kraken, valued at around $20 billion in its last fundraising, has been expanding its institutional offerings and asset classes. The company also maintains a presence in the Dubai Multi Commodities Centre (DMCC) and is awaiting approval from Dubai’s Virtual Assets Regulatory Authority (VARA) to resume operations in the UAE. Industry observers say the Federal Reserve milestone could enhance Kraken’s credibility in international regulatory markets.

The Federal Reserve’s approval comes as the U.S. crypto sector continues to attract institutional attention. Jeff Schmid, President of the Kansas City Fed, emphasized the importance of stability: “Throughout this transformation, the integrity and stability of the U.S. payments system remain our priority.”

Kraken Financial’s move is seen as a benchmark for other crypto banks seeking closer integration with traditional finance, signaling broader institutional adoption of digital assets.