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 issues and questions about the approval process.
Waters, who will likely return to the committee chair position if Democrats regain the House majority in this year’s elections (with an 84% chance based on current bets on Polymarket), sent a letter Thursday to the president of the Kansas City branch of the Federal Reserve System, Jeff Schmid. He suggested that the unusual approval of a “limited purpose account” at Kraken, which allows the company to become the first to gain direct access to the Federal Reserve’s payment services, has no clear legal basis.
“The announcement raises questions about approval because neither the statute nor the Federal Reserve Board’s Account Access Guidelines refer to a type of ‘limited purpose account,'” he wrote in the letter. “Accordingly, I am writing to request that you clarify the terms of the Kraken account access approval and provide additional information about the process and considerations informing the approval.”
The new account gave the American company full access to the same payment methods in which much of the traditional financial system operates. Several crypto-native companies have sought such access, but are still awaiting approval, keeping a close eye on a separate effort by the Federal Reserve Board in Washington to draft rules that could govern a “thin” master account for such companies. That process is still in the early stages.
When the Kansas City Federal Reserve was asked to comment on Waters’ inquiries, a spokesperson said the bank “received the letter and will review it.”
Kansas City Regional Bank, one of 12 such banks nationwide, announced earlier this month that Kraken would gain the long-sought access. Schmid said at the time that his bank was trying to maintain a system that “supports a level competitive playing field and reinforces the stability and resilience that has underpinned the Federal Reserve’s payment system offerings throughout their history.”
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