Rep. Maxine Waters (D-Calif.) sought further information on Thursday on the decision to grant cryptocurrency exchange Kraken access to Federal Reserve services.
Waters Says Approval Lacks Transparency
Waters, the leading Democrat on the House Committee on Financial Services, penned a letter to Jeff Schmid, President and CEO of the Federal Reserve Bank of Kansas City, requesting details about the bank’s recent approval of a “limited purpose account” for Kraken.
This approval—the first in U.S. history for a cryptocurrency company—gives Kraken direct access to Fedwire, the core payment infrastructure used by thousands of U.S. banks and credit unions.
Waters expressed her apprehensions about this development. She argued that access to the nation’s “critical” financial infrastructure should not be granted without complete transparency, a clear legal basis and assurance that risks are being adequately managed.
Waters also pointed out that the Kansas City Fed’s announcement “did not disclose specific information” about Kraken’s access to the Federal Reserve’s range of financial services, citing the confidentiality of business information.
“The announcement raises questions about the approval because neither statute nor the Federal Reserve Board’s Account Access Guidelines refer to a ‘limited purpose account’ type,” Waters stated.
The Kansas City Fed and Kraken didn’t immediately return Benzinga’s request for comment.
Major Boost For Kraken
The approval means Kraken could settle dollar transactions directly on Fed rails rather than routing through intermediary banks. For institutional clients and professional traders, that may mean faster deposits and withdrawals with less counterparty risk.
However, it includes guardrails. Kraken won’t earn interest on reserves or access the Fed’s emergency lending facilities.
However, Kraken recently announced a delay in its initial public offering (IPO) due to unfavorable market conditions affecting the digital asset sector. This decision followed Kraken’s earlier confidential filing for a U.S. IPO, aiming for a $20 billion valuation after closing an $800 million funding round.
IPO Momentum Stalls
Kraken has delayed its initial public offering due to unfavorable market conditions affecting the digital asset sector. This decision followed Kraken’s earlier confidential filing for an IPO, aiming for a $20 billion valuation after closing an $800 million funding round.
Kraken ranks as the second-largest U.S. cryptocurrency exchange by trading volume, handling $970 billion in the past 24 hours, behind Coinbase’s $1.58 billion, according to data from CoinGecko
The trading platform supports over 500 cryptocurrencies, including Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH) and Dogecoin (CRYPTO: DOGE).
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
Photo courtesy: Piotr Swat on Shutterstock.com
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