On September 17, 2020, the Wyoming Banking Board has officially granted Kraken the right to create a state-based crypto bank – the first of its kind within the United States. This particular crypto US bank will be tentatively called “Kraken Financial.” It shall be the first-ever US-based bank created by a crypto exchange.
Although Kraken Financial will indeed be referred to as a bank and will be treated as such, it is actually a Special Purpose Depository Institution (SPDI); making it a tad different to the conventional banks you see everywhere. This means that Kraken may readily secure digital assets within its custody, facilitate payment systems, and allow its users to transition from crypto and fiat currencies seamlessly. However, seeing that it will be an SPDI, Kraken is prohibited from issuing loans utilizing customer deposits.
Kraken Financial’s services will initially be limited to US residents only, excluding New York citizens. Its customers may have the chance to pay their bills or receive salaries by way of cryptocurrency in addition to depositing their assets within the bank. According to Kraken, it intends to add several new services soon, including staking services and crypto cards.
According to David Kinitsky, Kraken’s managing director, becoming a bank will grant the firm full access to the current federal payments framework. Thus, it can provide a smoother funding and banking options for its esteemed customers. Notably, Kinitsky will also stand as Kraken Financial’s CEO. Kraken Financial aims to launch this late 2020, but most probably in the first quarter of 2021, according to Kinitsky.
As per the inquiry on how Kraken Financial could make money for itself, Kinitsky stated that its principal means of revenue would come from service fees. He has also clarified that Kraken Financial, as an SPDI, would hold the entirety of its assets within its reserves. Lastly, by way of its newly-licensed bank, Kraken aims to remove third-party banking frameworks altogether, which shall serve as a means of cost-cutting and a way to render the processes smoother.