Key players: Involved are Kraken Financial/Payward Financial; Federal Reserve Bank of Kansas City (President Jeff Schmid); Federal Reserve Board (Vice Chair Michelle Bowman noted it as a pilot; Governor Waller driving "skinny" concept); Rep. Maxine Waters; critics including Bank Policy Institute (BPI), American Bankers Association (ABA), and other bank groups concerned about preemptive approval and risks.[1][2][3][5][7]
Context and timeline: The Fed's 2022 Account Access Guidelines classify uninsured entities like Kraken Financial as Tier 3, allowing discretion on services.[2][3] A December 19, 2025, RFI sought input on "payment accounts" (skinny prototypes for payments innovation) through February 6, 2026; this is the first Tier 3 approval post-RFI, positioned by the Fed as a one-year pilot to inform rules amid evolving payments.[1][2][4] Bank groups and Waters echoed immediate post-approval concerns over bypassing public input, transparency, and consistent standards across Reserve Banks.[1][5][7]
Newsworthiness: The approval marks the first Fed master account for a crypto-native firm, potentially expanding crypto access to core payments (e.g., reserves, settlements) before finalizing skinny account policies, raising debates on financial stability, AML/consumer protections, regulatory consistency, and competition between traditional banks and crypto entities amid ongoing Fed innovation efforts.[1][2][5][6] Waters' probe amplifies scrutiny just weeks after the March 4 announcement.[4][6][7]