House of Representatives Ranking Member Maxine Waters has pressed the Federal Reserve Bank of Kansas City over its approval of a “limited purpose account” for Kraken, expressing concerns about the implications of granting a crypto firm access to the Federal Reserve’s (Fed) payment system.
Rep. Waters Seeks Clarity On Kraken’s Master Account ApprovalIn the letter, Waters seeks clarification from the Kansas City Fed regarding the practical implications of this approval “at a time when Congress has debated whether or not to expand access to the Fed’s payment rails and on what terms.”
Notably, Kraken Financial, Kraken’s banking arm, made history as the first crypto company to gain direct access to the Federal Reserve’s core payment system. This achievement was accomplished after Kraken secured approval from the Kansas City Fed for a Fed master account earlier this month.
The milestone represents a significant triumph for the crypto industry, which had been repeatedly denied access to the Federal Reserve system for years. Previously, the company had relied on intermediary banks to facilitate transfers to other firms.
The lawmaker highlighted that granting a cryptocurrency firm access to the Federal Reserve’s payment system for the first time raises policy, regulatory, and consumer protection concerns, arguing that it is particularly concerning given the rapid pace at which financial innovation is outpacing the rules and safeguards designed to ensure the safety of the financial system.
The Kansas City Fed’s announcement does not disclose specific information about Kraken’s access to the range of Federal Reserve financial services “due to the confidentiality of business information provided by applicants.” However, the announcement raises questions about the approval because neither statute nor the Federal Reserve Board’s Account Access Guidelines refer to a ‘limited purpose account’ type.
Crypto Access To Fed’s Payment Rails Faces OppositionRepresentative Waters emphasized that access to the nation’s core payments infrastructure carries significant public responsibility and should not be extended without full transparency, clear legal grounding, and confidence that risks will be properly managed.
Therefore, she requested information no later than April 10, 2026, on the Federal Reserve services that Kraken can now access, the conditions or restrictions that apply, and the prudential, anti-money laundering (AML), and consumer protection considerations that were weighed before proceeding with the approval.
The lawmaker’s letter arrives as banking groups express significant concerns about granting crypto and fintech companies direct access to the Federal Reserve’s payment systems. Traditional banks have cautioned that even limited access could pose a substantial threat to the US payment system and overall financial stability.
This type of restricted account would enable payment fintechs and crypto companies to access the Federal Reserve’s payment systems. However, it would exclude other advantages more closely associated with banks, such as the discount window lending facility.
In addition, the Office of the Comptroller of the Currency (OCC) approved conditional bank charters for Ripple, Circle, BitGo, Paxos, and Fidelity in December, raising concerns that it could blur the lines between banking activities and lead to regulatory arbitrage.
