The Federal Reserve Bank of Kansas City has confirmed that the limited purpose Federal Reserve master account it granted to Kraken Financial in March provides access only to the Fedwire Funds Service. The disclosure resolves one of the sharpest questions raised by both Democrat legislators and banking associations since the digital asset bank became the first of its kind to receive a Fed account.
In a note published earlier this month, the Kansas City Fed disclosed the specific services and restrictions attached to the account for the first time. The Fed has separately been developing a stripped down version of master accounts, formally called payment accounts and widely dubbed “skinny” accounts, designed to give non traditional banks limited access to Fed infrastructure. That proposal explicitly excluded ACH access because the ACH system permits some credit extension. However, Kraken in its own submission to the Fed’s skinny account request for information had recommended that FedACH should be enabled by default. The Kansas City Fed has now confirmed Kraken did not receive it.
Additional restrictions include no access to intraday credit or the discount window, a closing balance limit, and no interest on balances.
The Kansas City Fed also formally characterized the account as a pilot of the skinny account concept, echoing language first used by Fed Vice Chair Michelle Bowman at an American Bankers Association conference in March. Although the account was granted under existing authorities, the Kansas City Fed acknowledged that its terms are consistent with the skinny account proposal.
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