House of Representatives Ranking Member Maxine Waters has pressed the Federal Reserve Bank of Kansas City over its approval of a “limited purpose account” for Kraken, expressing concerns about the implications of granting a crypto firm access to the Federal Reserve’s (Fed) payment system.
Rep. Waters Seeks Clarity On Kraken’s Master Account Approval
On Thursday, Representative Maxine Waters, the top Democrat on the House Financial Services Committee, sent a letter to Jeff Schmid, President and CEO of the Federal Reserve Bank of Kansas City, questioning the Kansas City Fed’s recent decision to approve a “limited purpose account” to the US’s second-largest crypto exchange, Kraken.
In the letter, Waters seeks clarification from the Kansas City Fed regarding the practical implications of this approval “at a time when Congress has debated whether or not to expand access to the Fed’s payment rails and on what terms.”
Rep. Waters' letter to Kansas City Fed's President Jeff Schmid. Source: House Financial Services Committee
Notably, Kraken Financial, Kraken’s banking arm, made history as the first crypto company to gain direct access to the Federal Reserve’s core payment system. This achievement was accomplished after Kraken secured approval from the Kansas City Fed for a Fed master account earlier this month.
As reported by Bitcoinist, the master account’s approval will enable Kraken Financial to expedite and streamline transactions for its large clients and professional traders. Additionally, it will grant Kraken’s banking unit direct access to Fedwire, a prominent interbank payment system that processes over $4 trillion in transfers daily.
The milestone represents a significant triumph for the crypto industry, which had been repeatedly denied access to the Federal Reserve system for years. Previously, the company had relied on intermediary banks to facilitate transfers to other firms.
The lawmaker highlighted that granting a cryptocurrency firm access to the Federal Reserve’s payment system for the first time raises policy, regulatory, and consumer protection concerns, arguing that it is particularly concerning given the rapid pace at which financial innovation is outpacing the rules and safeguards designed to ensure the safety of the financial system.
The Kansas City Fed’s announcement does not disclose specific information about Kraken’s access to the range of Federal Reserve financial services “due to the confidentiality of business information provided by applicants.” However, the announcement raises questions about the approval because neither statute nor the Federal Reserve Board’s Account Access Guidelines refer to a ‘limited purpose account’ type.
Crypto Access To Fed’s Payment Rails Faces Opposition
Representative Waters emphasized that access to the nation’s core payments infrastructure carries significant public responsibility and should not be extended without full transparency, clear legal grounding, and confidence that risks will be properly managed.
Therefore, she requested information no later than April 10, 2026, on the Federal Reserve services that Kraken can now access, the conditions or restrictions that apply, and the prudential, anti-money laundering (AML), and consumer protection considerations that were weighed before proceeding with the approval.
The lawmaker’s letter arrives as banking groups express significant concerns about granting crypto and fintech companies direct access to the Federal Reserve’s payment systems. Traditional banks have cautioned that even limited access could pose a substantial threat to the US payment system and overall financial stability.
For context, Kraken’s limited access to the master account is similar to the “skinny” master account concept initially proposed by the Federal Reserve Board of Governors in October 2025.
This type of restricted account would enable payment fintechs and crypto companies to access the Federal Reserve’s payment systems. However, it would exclude other advantages more closely associated with banks, such as the discount window lending facility.
In addition, the Office of the Comptroller of the Currency (OCC) approved conditional bank charters for Ripple, Circle, BitGo, Paxos, and Fidelity in December, raising concerns that it could blur the lines between banking activities and lead to regulatory arbitrage.
Last month, the American Bankers Association (ABA) urged the main banking regulator to postpone its approval of applications for crypto bank charters, suggesting that the agency should wait until the regulatory uncertainties are resolved.
Total crypto market capitalization is at $2.27 trillion in the one-week chart. Source: TOTAL on TradingView
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