Kraken's approval for a main account with the Federal Reserve raises concerns about systemic risk

Kraken becomes the first cryptocurrency exchange approved for a main account by the Federal Reserve, but the account is restricted, only allowing its banking operations to access the Fedwire payment system and maintain a limited balance, without the ability to earn interest or obtain emergency loans. This move has raised concerns about risks and transparency in the U.S. financial system, including calls from House Financial Services Committee Chair Maxine Waters for more disclosure on account details.

Regulatory experts point out that lightly regulated crypto companies having direct access to the Federal Reserve payment system could pose operational and financial stability risks. The Federal Reserve stated that the related restrictions are intended to mitigate liquidity shocks and credit risks, but the banking industry warns that this could affect liquidity in the banking system and exacerbate money laundering and operational loopholes. Kraken stated that its banking reserves are fully supported and comply with bank-level anti-money laundering and customer identification requirements.