Kraken is the first crypto exchange to obtain a US banking charter.
The state of Wyoming has unanimously approved Kraken’s application to form the world’s first Special Purpose Depository Institution (SPDI), called Kraken Financial. On the Unchained Podcast, David Kinitsky, CEO of Kraken Financial, reveals reasons behind the company’s application:
“First is regulatory, we are going to be in a much better regulatory position here as a bank …the second reason is because of infrastructure…it is very important to us to get direct access to the federal payment system and be able to integrate that seamlessly into our customer products and experiences…the third reason is the creation of an entirely new product and distribution platform…we can offer products that we wouldn’t be able to as a non-bank and serve customers such as institutions that we wouldn’t otherwise be able to serve.”
Kraken Financial will enable Kraken clients in the U.S. to bank seamlessly between digital assets and national currencies.
“We are going to be able to more seamlessly integrate funding and withdrawal mechanisms and payment mechanisms into our products… then our customers will really see the difference once we start launching new products like debit cards backed by digital assets, staking, IRA accounts or other tax-advantaged accounts… institutional customers will also see a big difference because we’ll be able to offer qualified custody and other similar services”, Kinitisky added.
The new subsidiary, as an SPDI bank, will be required to maintain 100% reserves of its deposits of fiat currency at all times. An SPDI is a specialized custody bank that can perform all activities of a bank, except for making loans from customers’ deposits. In its first phase of operation, Kraken Financial will only offer accounts to U.S. residents but the company is planning to become a global bridge between the crypto economy and the existing financial ecosystem.
This announcement could be remembered as a historic breakthrough in the adoption of cryptocurrencies in everyday life. Today, more than ever, banks and crypto are starting to be the two sides of the same coin.
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