Popular cryptocurrency trading platform Kraken has announced the State of Wyoming has approved its application to form the world’s first Special Purpose Depository Institution (SPDI), allowing it to form a crypto bank dubbed Kraken Financial.
According to an announcement the firm published, Kraken Financial is headquartered in Wyoming and is the “first digital asset company in U.S. history to receive a bank charter recognized under federal and state law.” It will be the first regulated bank in the country to provide deposit-taking, custody, and fiduciary services for cryptocurrencies.
The announcement details its clients will be able to pay bills and receive their salaries in cryptocurrency and incorporate digital assets into their investment portfolios. Clients will be able to bank directly with Kraken Financial, as they would with any other bank.
David Kinitsky, CEO of Kraken Financial, was quoted as saying:
We’re thrilled to work in a state so aligned with our philosophy and values. Wyoming is a rare and shining example of how thoughtful regulation can drive innovation for FinTech companies.
The new financial institution will be regulated “largely in the same manner” as other banks in the United States. Kraken says it applied for an SPDI charter to fulfill its vision of becoming the “world’s trusted bridge between the crypto economy of the future and today’s existing financial ecosystem.”
Per Kraken, it will now able to operate a fully independent bank and reduce its reliance on third-party financial institutions. The move will also help it launch new products such as a crypto debit card, a yield account, account management services, cryptocurrency staking services, and more.
The announcement details Kraken will be required to maintain all of its reserves of fiat currency.
Kraken Financial, as a bank, is required by Wyoming law to maintain 100% reserves of its deposits of fiat currency at all times. If every client were to demand withdrawals of their fiat at the same moment, Kraken Financial would be able to fulfill each withdrawal immediately without regard to how many loans we had outstanding.
In its first phase of operation, Kraken Financial will only offer accounts to U.S. residents, but plans on expanding the service in the future. While initially, it will focus on crypto and fiat currency-based services, it noted that it could offer wealth management, treasury services, and even securities as its services expand.
Featured image via Unplash.