Top banking trade groups slammed the Fed’s decision to hand a coveted master account to crypto firm Kraken Wednesday, arguing the move was not only risky, but violated the central bank’s own policies.
Traditional banking industry groups immediately denounced the approval, claiming it could pose substantial dangers to the U.S. economy.
“There are significant risks to expanding direct Fed account access to institutions that operate outside the traditional banking regulatory framework,” Rebeca Romero, CEO of the Independent Community Bankers of America, said in a statement. “The Fed should continue limiting master account access to institutions that meet the financial services sector’s highest standards.”
While that public comment period ended last month, BPI said Wednesday that the Kraken approval still “front-runs” the Fed’s process for considering the creation of a skinny master account program. The program appears to have not yet been finalized or approved by the Fed’s board.
“This action ignores public comment that the Federal Reserve sought on this framework, and it was issued with no transparency into the process for approval or the risk mitigants that have been imposed to address the very significant risks it raises,” Pidano Paridon, BPI’s co-head of regulatory affairs, said in a statement.
The flare-up comes as the banking lobby and crypto industry remain locked in a feud over stablecoin rewards, one that has brought crypto’s long-sought market structure bill to a halt in Congress.
