U.S. Rep. Maxine Waters, the ranking Democrat on the House Financial Services Committee, is questioning the limited “master account” obtained by crypto exchange Kraken from the Federal Reserve Bank of Kansas City, which she says raises potential consumer protection concerns and questions about the approval process.
Waters, who is likely to return to the committee chair seat if Democrats regain the House majority in this year’s elections (pegged at an 84 percent chance in current Polymarket betting), sent a letter Thursday to the president of the Kansas City branch of the Fed System, Jeff Schmid. She suggested that the unusual approval of a “limited-use account” at Kraken, which allows the company to become the first to gain direct access to Federal Reserve payment services, rests on an unclear legal basis.
“The announcement raises questions about approval because neither the law nor the Federal Reserve’s account access guidelines refer to any type of ‘restricted account,'” she wrote in the letter. “Accordingly, I am writing to request that you clarify the conditions for approval of access to the Kraken account and provide additional information regarding the process and considerations that prompted the approval.”
The new account granted the American company full access to the same payment channels that much of the traditional financial system operates on. Several crypto-native companies have requested this access but are still awaiting approval, closely watching a separate effort by the Federal Reserve in Washington to draft rules that could govern a “lean” master account for these companies. This process is still in its early stages.
When the Kansas City Fed was asked for comment on Waters’ questions, a spokesperson said the bank had “received the letter and will review it.”
The Kansas City regional bank — one of 12 such banks nationwide — announced earlier this month that Kraken would get the much-sought access. Schmid said at the time that his bank was trying to maintain a system that “supports a level of fair competition and reinforces the stability and resiliency that have underpinned the Federal Reserve’s payments system offerings throughout its history.”
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