- Wyoming allows Kraken to provide banking services.
- Kraken Financial will offer US residents a wide range of banking and investment services.
- This is the first attempt to combine the traditional financial industry and cryptocurrencies.
Kraken to open its own bank in Wyoming
Kraken cryptocurrency exchange will open Kraken Financial in Wyoming to expand the range of services for its clients without the involvement of intermediaries.
Kraken Financial will be regulated by the Wyoming Division of Banking as a special purpose depository institution (SPDI). This new structure was created specifically for firms in the cryptocurrency industry. This will allow Kraken to serve as a bank for its clients and act as a digital asset exchange operator.
Previously, Kraken resorted to the services of third-party service providers to make money transfers, now the exchange will be able to carry out these actions on its own, expanding its presence in the financial system.
Cryptocurrency firms and exchanges often face challenges when interacting with banks. For example, in May, Irish banks began to close the accounts of cryptocurrency companies due to the delay in implementing the AMLD5 directive into local legislation. Two years ago, the Reserve Bank of India (RBI) banned banks from serving organizations related to cryptocurrencies, but in the spring of 2020, the Indian Supreme Court overturned the RBI ban.
“The opening of Kraken Financial will symbolize the modernization of the banking infrastructure. The exchange will not have to rely entirely on third-party service providers, and it will have the opportunity to launch new products for different categories of customers. Moreover, we will have more stability in terms of regulation, ”said Kraken Financial CEO Dave Kinitsky.
Kinicki added that Kraken Financial will significantly speed up transfers between external and exchange accounts of Kraken clients. Users will directly interact with the Kraken Financial bank, through which they will be able to make deposits in USD and digital assets on the exchange, without using the services of other banks, and withdraw funds in the same way.
Going forward, Kraken plans to launch cryptocurrency debit cards and add the ability to open interest and retirement accounts. In addition, the bank’s status will allow Kraken to provide services related to securities, financial derivatives and operations in the commodity markets.
Kraken management said that before the bank’s official opening, it is necessary to establish relations with correspondent banks and open an account with the US Federal Reserve System (FRS). At the same time, it is not known how the regulators of other US states will react to this. According to Kinitski, the exchange may have difficulties with regulators in New York, since several years ago Kraken ignored the request of the New York attorney general’s office to disclose information about its activities.
As a reminder, this year Kraken bought out the Australian trading platform Bit Trade. Last year, Kraken acquired Crypto Facilities, a UK-based digital asset trading service that was later renamed Kraken Futures to function as a regulated futures exchange.