Banking and Finance Law Daily Wrap Up, FEDERAL RESERVE SYSTEM—ICBA asks Kansas City Fed to review Kraken’s access to payment systems, (Jun 22, 2026)

By Nora Macaluso

The group representing community banks said it has significant concerns about an uninsured crypto entity having access to Federal Reserve payment systems.

The Independent Community Bankers of America asked the Federal Reserve Bank of Kansas City to conduct an “immediate review” of Kraken Financial’s access to Federal Reserve payment systems and take action to restrict, suspend, or terminate that access in light of “serious fraud, sanctions, and illicit finance concerns.”

“Direct access to Federal Reserve payment infrastructure is a privilege carrying significant public responsibility,” the ICBA said. “It should not continue where emerging facts call into question the applicant’s judgment, risk management, and ability to protect the safety, soundness, and integrity of the payments system.”

The ICBA and 42 state bankers’ associations earlier this year objected to the Kansas City Fed’s decision to grant Payward Financial, d/b/a Kraken Financial, access to a

Federal Reserve master account, warning that the approval raises significant risk, policy, and precedent concerns for the U.S. payments system (see Banking and Finance Law Daily, Apr. 9, 2026).

The Fed bank’s response and actions taken since then have not allayed those concerns, the ICBA said. While Kraken’s access is limited to the Fedwire funds service, this restriction is “not a substitute for comprehensive federal supervision, enterprise-wide visibility, and clear criteria for renewal, suspension, or revocation if risks materialize,” the groups said in a letter to Kansas City Fed President and Chief Executive Officer Jeffrey R. Schmid.

“The recent reporting regarding Kraken’s relationships with crypto-kiosk operators accused of facilitating widespread fraud underscores why the Kansas City Fed should immediately review whether Kraken’s account remains consistent with the Account Access Guidelines and whether additional restrictions, suspension, non-renewal, or termination are warranted,” the letter said.

The group noted concerns about Kraken’s reported involvement in cryptocurrency-related fraud.

“The Federal Reserve Bank of Kansas City should not allow the ‘pilot’ nature of Kraken’s account to become a reason for inaction,” the ICBA said in its letter. “A true pilot must include mandatory evaluation points, clear guardrails, strong enforcement mechanisms, and well-defined criteria for renewal or revocation if risks materialize.”

“At a minimum, the Kansas City Fed should evaluate whether Kraken Financial and the broader Payward enterprise maintain adequate BSA/AML and sanctions controls; whether Kraken’s relationships with crypto-kiosk operators raise unaddressed suspicious-activity, customer due diligence, or enhanced due diligence concerns; and whether Kraken’s role in the Tron ecosystem creates unacceptable exposure to illicit finance or sanctions-evasion risk,” the ICBA said.

Kraken and Payward should not be permitted continued access without “clear evidence” that they “can meet the rigorous standards necessary to protect the integrity of the payments system,” the letter said.

Companies: Independent Community Bankers Association; Kraken Financial; Payward Financial

RegulatoryActivity: BankingOperations Blockchain ChecksElectronicTransfers FederalReserveSystem FinancialIntermediaries FinTech