Waters Questions Kraken's Fed Master Account Approval

U.S. Representative Maxine Waters, the ranking Democrat on the House Financial Services Committee, has demanded explanations from the Federal Reserve Bank of Kansas City regarding its recent approval of a limited-purpose master account for cryptocurrency exchange Kraken. In a letter sent Thursday to bank President Jeff Schmid, Waters requested details on the legal basis for the decision, the scope of services provided, and any safeguards in place, setting a response deadline of April 10.

The approval, announced earlier this month, marks the first time a cryptocurrency firm has gained direct access to the Federal Reserve's payment infrastructure. Kraken Financial, a subsidiary of Payward Financial operating as Kraken, now holds what the bank describes as a limited-purpose account. This allows the company to connect to Fedwire, the central payment system used by thousands of banks and credit unions for high-value dollar transactions. Officials at the Kansas City Fed stated that specific details about the account remain confidential due to business information protections provided by applicants.

Waters expressed concerns that the arrangement lacks clear legal grounding, noting that...