The Federal Reserve Bank of Kansas City approved a limited-purpose master account for Kraken Financial on March 4. The approval grants the Wyoming-chartered crypto bank direct settlement access on Fedwire. Fed Vice Chair for Supervision Michelle Bowman described the decision as a one-year pilot. Kraken cannot access the discount window or earn interest on reserve balances.
The approval follows a December 2025 Federal Reserve Board proposal to create a new payment account category for eligible financial institutions. Payment accounts would function as stripped-down master accounts restricted to clearing and settling an institution's own payments. Overnight balance caps would apply at the lesser of $500 million or 10 percent of the holder's total assets. Payment accounts could not be used for correspondent banking or to settle transactions for respondent institutions.
Both developments align with the GENIUS Act's requirement that stablecoin issuers redeem at par within two business days. Direct Fed settlement access could simplify reserve management for issuers that must maintain dollar-for-dollar backing. The Bank Policy Institute warned that Kraken's approval sets a precedent for broader nonbank access to the Federal Reserve System. Representative Maxine Waters demanded the Kansas City Fed explain its legal basis for the approval by April 10.