Kraken, a cryptocurrency exchange, has become the first cryptocurrency bank in the United States. The State of Wyoming has approved Kraken’s application to form the world’s first Special Purpose Depository Institution (SPDI). This means that Kraken will be America’s first regulated provider of deposit-taking, custody and fiduciary services for cryptocurrencies and related assets. The bank will operate on online and mobile-first banking model.
Special Purpose Depository Institutions (SPDIs) are banks that receive deposits and conduct other incidental activities, including fiduciary asset management, custody and related activities. SPDIs may resemble custody banks in that these institutions will likely focus on fiduciary activities, safekeeping, asset management and servicing.
Kraken will offer banking services such as paying bills and receiving salaries in cryptocurrency, incorporating digital assets into investment and trading portfolios. Other services include digital asset custody, demand/deposit accounts (DDAs), wire transfer and funding services. Kraken services will essentially provide a bridge between digital assets and US dollars.
In the next few years, Kraken intends to expand its services to include digital asset staking, trust account and administration, a complete online and mobile banking suite of products, and a debit card for cryptocurrencies. Corporate clients will also enjoy the following services: account management services, bank comfort letters, deposit verifications, and proof of funds attestations.
Forward-looking statements, including product offerings, regulatory plans and business plans subject to change without notice.
Having a US bank charter, which is recognized by federal and state laws, means that Kraken will be able to operate throughout the United States. However, it plans to extend its operations to other parts of the world. In the first phase, Kraken will only offer accounts to U.S. residents.
Kraken is required by Wyoming law to maintain 100% reserves of its deposits of fiat currency at all times to protect customers’ deposits. If every client were to demand withdrawals of their fiat at the same moment, Kraken would be able to fund the withdrawals. Despite being a non-traditional bank, Kraken will be regulated in the same manner as other US banks by the Wyoming Division of Banking.
As cryptocurrencies such as Bitcoin are slowly going mainstream, Kraken’s licence to operate a virtual bank account to handle digital assets is a step in the right direction. We are looking forward to review its services once the bank is fully operational.