Popular digital asset exchange, Kraken, has been given the green light to form a ‘Special Purpose Depository Institution (SPDI)’. This designation will allow for Kraken to develop a new entity, known as Kraken Financial, which will act as a chartered bank offering comprehensive digital asset services such as deposit-taking, custody, and fiduciary services.
“Kraken’s vision is to become the world’s trusted bridge between the crypto economy of the future and today’s existing financial ecosystem.”
Kraken is the first company specializing in digital assets to receive the SPDI status – a particularly noteworthy step forward for Kraken and the blockchain industry as a whole.
Becoming a Bank
By becoming the first bank of its kind in the US, Kraken Financial is expected to play an important role in continuing the adoption of digital assets. Some other benefits include:
- Kraken Financial gains a first-mover advantage being the first entity of its kind
- Blockchain as a whole will benefit through increased clout, adoption, and prevalence
- The public will benefit through increased access to financial services built for the future
The forward-thinking nature of Wyoming regulators has not gone unnoticed by those responsible for Kraken services. While many States have taken a more cautious approach towards the adoption of cryptocurrencies, Wyoming appears primed to blaze a trail forward through its treatment of FinTech.
“We’re thrilled to work in a state so aligned with our philosophy and values. Wyoming is a rare and shining example of how thoughtful regulation can drive innovation for FinTech companies.” – David Kinitsky, CEO of Kraken Financial
When Kraken Financial first launches, services will be restricted to U.S. based clientele only. The company notes that accessibility will expand over time to include international clients.
The hard work that Kraken put into achieving this goal was not simply for the title. By becoming a chartered bank, it will now legally be able to offer a variety of new services; each of which will help the company achieve its end goal of bridging traditional finance with the world of blockchain and cryptocurrencies. The following are just a few of the services to be supported over time.
- Custodial Services
- FIAT Payment gateways
- Account Management Services
“From paying bills and receiving salaries in cryptocurrency to incorporating digital assets into investment and trading portfolios, Kraken Financial will enable Kraken clients in the U.S. to bank seamlessly between digital assets and national currencies.”
Along with offering new services, Kraken will also gain the ability to support a wider range of asset classes. Until now, the company has dealt primarily with cryptocurrencies. Moving forward, however, Kraken notes that the possibility remains for securities to be supported. With company roots surrounding digital assets, it would stand to reason that support for securities would include digital securities/security tokens, as well.
While the aforementioned expansion of supported assets and offered services is a definite positive for Kraken, its new designation as a bank also comes with increased regulatory scrutiny.
In addition to now being subject to all the same rules as a traditional bank, it is noted that it will be required to maintain 100% of deposit reserves at all times. This means that the bank will not be taking part in fractional reserve lending – providing its clients with full access to their funds at all times.
Founded in 2020, Kraken Financial is headquartered in Cheyenne, Wyoming. This subsidiary of Kraken will function as a chartered bank, offering a variety of services, tailor-built to bridge traditional finance with blockchain-based assets.
CEO, Dave Kinitsky, currently oversees company operations.
In Other News
Kraken has always been a leader in the world of blockchain. Not only is the company a vocal proponent for digital assets, but it has also taken various past actions to forward the sector. We covered one such instance, as Kraken was a founding member of the ‘Crypto Ratings Council (CRC)’.
The CRC is a self-regulated group – comprised of industry leaders like Coinbase, Circle, Bittrex, and Kraken – which has tasked itself with educating the public on asset classification. To learn more about what the CRC does, and how they do it, make sure to peruse our previous coverage, HERE.