The first of its kind: Kraken crypto exchange just became a US bank

Yesterday, September 16th, was a big day for the cryptocurrency industry, as a cryptocurrency exchange Kraken, became the first crypto business to become a recognized US bank. The move was brought by the Wyoming Banking Board, which approved the exchange’s application for SPDI (Special Purpose Depository Institution) charter through a vote.

1/ IT'S OFFICIAL!!! Welcome to #Wyoming, @krakenfx! 🐙+🤠=🔥🚀🎉What a win-win for #crypto & Wyoming! As of **NOW** Kraken has a US bank charter—a 100% reserves-required, audit required (w/ #ProofOfReserves), custody via legal bailment, no #rehypothecation type of bank!🤠 pic.twitter.com/BO9CG8Jqoc

— Caitlin Long 🔑 (@CaitlinLong_) September 16, 2020

Kraken Financial will be in charge of banking operations

Following the results of the voting, Kraken became the first SPDI bank in Wyoming. Not only that, but it will also be the first newly-chartered bank in Wyoming since 2006, according to Chris Land, the general counsel of the Wyoming Division of Banking.

Kraken’s own managing director, David Kinitsky, commented on the move. He said that “By becoming a bank we get direct access to federal payments infrastructure, and we can more seamlessly integrate banking and funding options for customers.”

With the move, Kraken also got a new department known as Kraken Financial, with Kinitsky as its CEO.

The US has truly started opening its doors to cryptocurrencies since the July letter from the Comptroller of the Currency’s office, which gave the banks permission to offer crypto custody services. Following this, the Division of Banking revealed that it worked with Promontory Financial Group with the goal of creating a manual for banks regarding crypto-involving procedures. The manual is scheduled to be published in October of this year.

What is next for Kraken?

With Kraken becoming an official bank, it will be allowed to enter new jurisdictions. It also has regulatory permission to enter other states without having to comply with each state’s regulations individually.

Interestingly enough, the exchange did not reveal that it filed the application for this kind of permission.

The majority of its revenue is expected to come from services and fees, according to Kinitsky. It will not be allowed to lend, and it will have to hold 100% of its assets in reserve.

The company will become a US customer service provider eventually, but for the time being, it will have the same function as other banks with which Kraken has collaborated so far.

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