Kraken Set To Launch Its Own Bank

GB Market Commentary 08/03/2023

by Marcus Sotiriou

Cryptocurrency exchange Kraken plans to disrupt the banking sector by launching Kraken Bank. On its website the exchange says, “We're building a better kind of crypto & Bitcoin bank for our clients."

It stated further, “We're looking into products like deposit accounts in USD and crypto assets (ex. Bitcoin), multiple funding and payments options, institutional custody products (qualified custody for advisors and broker dealers), IRAs and many more."

It claims to have strict security standards, even claiming, "We’re willing to bet we’re more secure than your current bank."

The offering will be available to the existing clients of the exchange in the US to begin with.

The bank will be part of the Wyoming Special Purpose Depository Institution (SPDI) framework. This means it will be overseen by the Wyoming Division of Banking, who require reserves to be kept full and no user funds lent out without the need for insurance from the Federal Deposit Insurance Corporation (FDIC).

With so much pushback from the US government on digital asset brokers and exchanges, was it inevitable that existing digital asset brokers and exchanges turn into banks?

Kraken has had enough and decided it’s time to build a parallel infrastructure for crypto.

Maybe crypto enthusiasts have been right all along - TradFi can catch up or be left behind.

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