On the same day Kraken’s Fed master account was approved, banking lobbying groups immediately launched a counteroffensive.
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On the same day Kraken’s Fed master account was approved, banking lobbying groups immediately launched a counteroffensive.
Bank lobbying groups strongly criticized Kraken’s acquisition of a “streamlined” Federal Reserve master account.
Navigating Web3 tides with focused insightsAuthor: DLNews
Translation & Editing: TechFlow
TechFlow Intro: Kraken has secured a Federal Reserve master account—and banking lobbying groups have immediately objected, calling the move noncompliant, lacking transparency, and bypassing the public comment process.
This is more than just a regulatory dispute; it’s a microcosm of the direct collision between the crypto industry and the $23 trillion traditional banking sector—amid escalating tensions over stablecoin interest rates.
Full Text Below:
- Kraken has been approved for a Federal Reserve master account.
- This is viewed as a milestone for an industry long suppressed.
- But banking lobbying groups are pushing back against the decision.
Banking lobbying groups expressed “deep concern” following the approval of Kraken’s master account application by the Federal Reserve Bank of Kansas City.
This victory grants the cryptocurrency exchange access to the same payment infrastructure used by thousands of banks and credit unions.
“We are deeply concerned that the Federal Reserve Bank of Kansas City approved a ‘limited-purpose’ master account application—a seemingly ‘streamlined’ account—while the Board of Governors has yet to finalize its policy framework for such accounts,” said Paige Pidano Pariton, Co-Director of Regulatory Affairs at the Bank Policy Institute, in a statement.
The advocacy group also criticized the Kansas City Fed’s decision for disregarding public input, lacking transparency, and violating “the Board’s own policy requiring public consultation before making significant changes to the payment system.”
For Senator Cynthia Lummis (R-WY), a long-standing crypto advocate, the decision marks “a watershed moment.”
Indeed, it arrives at a pivotal juncture where the crypto industry is directly clashing with U.S. banking—gaining increasing legal and regulatory recognition, thereby encroaching on territory traditionally dominated by the $23 trillion U.S. lending industry.
Kraken did not immediately respond to requests for comment.
“A Milestone”
Kraken celebrated the master account approval on Wednesday, a move expected to enable faster and smoother transaction processing for large clients. Arjun Sethi, Kraken’s Co-CEO, told DL News in September that the company aims for institutional investors to account for one-third of its revenue.
Although Kraken will not receive the full suite of services available to banks at the central bank—including interest on reserves held at the Federal Reserve—this remains a major win for an industry long treated as finance’s “unwanted stepchild.”
“This milestone marks the integration of crypto infrastructure into the nation’s financial rails,” Sethi said in a statement. “With a Federal Reserve master account, we can operate as a directly connected financial institution—not merely a peripheral participant in the U.S. banking system.”
President Trump’s pro-crypto policies have lent legitimacy to the industry. In his first year back in the Oval Office, the 79-year-old president issued a series of crypto-friendly executive orders, appointed industry allies to key government positions, advocated for lighter regulation, and signed the landmark GENIUS Act—a stablecoin bill.
However, the GENIUS Act contains a loophole that may allow crypto exchanges to pay interest on customers’ stablecoin holdings—a provision strongly opposed by banks, which fear it could lure customers away from traditional banks.
This week, Trump sided with the crypto industry in the months-long dispute over stablecoin yields—a conflict that has threatened negotiations over the CLARITY Act, the draft U.S. crypto regulatory framework.
Banks have been lobbying lawmakers to include language in the CLARITY Act closing this so-called stablecoin interest loophole. Crypto firms have pushed back, accusing banks of attempting to renegotiate provisions of a bill more than six months after its enactment.
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