Kraken Financial, the Wyoming-chartered bank owned by Payward Inc. (the parent company of cryptocurrency exchange Kraken), has been granted a Federal Reserve master account, making it the first digital asset bank in U.S. history to gain direct connectivity to the Federal Reserve’s payment infrastructure.

The milestone approval gives Kraken Financial immediate access to Fedwire and other core U.S. payment systems without relying on intermediary correspondent banks. The development is expected to deliver faster, cheaper, and more efficient fiat settlement for institutional clients while reducing operational complexity and counterparty risk.

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

Sethi added that the full-reserve structure of the Wyoming Special Purpose Depository Institution (SPDI) creates a “uniquely resilient foundation,” enabling direct settlement on Fedwire, reduced dependency on third-party banks, and the integration of regulated fiat liquidity directly into digital asset markets.

“Over time, this architecture could enable atomic settlement between fiat and crypto, institutional-grade cash management integrated with digital asset custody, and programmable financial products built within a fully regulated framework,” he said. “This is what it looks like when crypto infrastructure matures into core financial infrastructure.”

Kraken Financial, which operates on a 100% reserve basis with liquid assets equal to or exceeding client fiat deposits, will begin with a phased rollout focused initially on institutional client activity on the Kraken platform. Additional capabilities will be integrated into Payward’s broader infrastructure over time in coordination with regulators.

The approval follows more than five years of intensive regulatory engagement, examinations, and coordination with both the Federal Reserve and Wyoming state supervisors. As a state-chartered SPDI, Kraken Financial is subject to robust oversight while maintaining its focus on bridging traditional finance and digital assets.

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https://blog.kraken.com/news/federal-reserve-master-account