Cryptocurrency Exchange Kraken to Establish the First Crypto Bank In The U.S.
In a big development, the San Francisco-based cryptocurrency exchange Kraken has received the approval from the Wyoming State regulator to launch the first cryptocurrency bank in the United States under SDPI charter.
As per the license granted for “Special Purpose Depository Institution,” Kraken Financial will be able to offer some of the banking services like a cryptocurrency debit card, deposit taking, custodial services, as well as other fiduciary services for cryptocurrencies.
Speaking on the latest development, David Kinitsky, a managing director at Kraken and the CEO of the newly formed Kraken Financial, said: “By becoming a bank we get direct access to federal payments infrastructure, and we can more seamlessly integrate banking and funding options for customers”.
Explaining its scope of services, the Kraken blog post notes: “From paying bills and receiving salaries in cryptocurrency to incorporating digital assets into investment and trading portfolios, Kraken Financial will enable Kraken clients in the U.S. to bank seamlessly between digital assets and national currencies”.
During the first phase on operation, Kraken Financial can only provide crypto accounts to U.S. residents. Also, Kraken will be restricted from using crypto deposits to offer loans, for the time being. At the moment Kraken is prohibited from lending on the US dollar side. There are some provisions in the statute that enable Kraken to facilitate customer-directed lending of digital assets.
The Kraken Financial crypto bank will allow customers to easily switch between fiat and cryptocurrency thereby forming a bridge between crypto payment systems and traditional USD payment systems.
Kraken will need to comply with all federal and state laws related to regulations for anti-money laundering and ‘know your customer’ (KYC). Furthermore, Kraken Financial will have to abide by Wyoming’s SDPI rules and other digital asset laws that makes it mandatory to have 100% reserved fiat deposits and also meet other consumer protection standards.
The launch of Kraken’s crypto bank will happen by either late 2020 or by early 2021. Apart from the United States, Kraken has recently expanded its operations in Europe and much-recently in Japan.
Of lately, the U.S. regulators have been making moves pushing some positive developments aiming to bring cryptocurrencies closer to traditional financial institutions like banks.
Recently, all state regulators announced that they aim to simplify the laws are rules for crypto assets by working together. Currently, different states in the U.S. have different crypto laws.
Besides in July, the U.S. regulators also gave a green signal to national banks for providing cryptocurrency custodial services.