Digital Assets: Kraken Digital Exchange Wins U.S. Bank Charter
The State of Wyoming greenlighted Kraken’s application to form the world’s first Special Purpose Depository Institution (SPDI).
Kraken Financial, the new entity, can operate as a fully independent bank and is the first digital asset company in the U.S. to receive a bank charter recognized under both federal and state laws. As an SPDI, it can offer the full range of deposit-taking, custody, and fiduciary services for digital assets in a fully regulated manner. (Bitcoin.com)
- Headquartered in Cheyenne, Wyoming (“permanent physical presence”)
- A bridge between digital assets and national currencies
- Kraken no longer has to depend on third party financial institutions for its banking
- Though initially, the crypto firm will focus on the domestic market, it has plans for a global presence
- It will initially offer accounts only to U.S. residents
- Will maintain 100% reserves against its deposits of fiat currencies at all times
- Will therefore not require to insure with the FDIC
- The Exchange will benefit from Kraken Financial’s ability to accept USD deposits and offer custody for digital assets. Clients will appreciate the regulatory clarity and better funding support
- Kraken intends to offer crypto services such as custody of digital assets, demand/deposit accounts (DDAs), and wire transfer and funding services
- Kraken Financial will be an online and mobile-based bank
- Major revenue drivers would be fees and services; however, SPDIs cannot lend out money
David Kinitsky, the CEO, said: “We’re thrilled to work in a state so aligned with our philosophy and values. Wyoming is a rare and shining example of how thoughtful regulation can drive innovation for FinTech companies.”
Coindesk quoted Wyoming Division of Banking’s general counsel, Chris Land, as saying that Kraken is the first bank since 2006 to receive a charter.