Banking and Finance Law Daily Wrap Up, FEDERAL RESERVE SYSTEM—Waters seeks details on Kraken’s Federal Reserve account approval, (Mar 27, 2026)

By WK Editorial Staff

A senior House lawmaker is pressing the KC Fed for clarity on its decision to grant a first-of-its-kind Federal Reserve account to a crypto firm, citing transparency, legal authority, and risk management concerns.

Representative Maxine Waters (D-Calif.), the Ranking Member on the House Financial Services Committee, has formally questioned the Federal Reserve Bank of Kansas City about its recent approval of a Federal Reserve account for Payward Financial, which operates the cryptocurrency exchange Kraken Financial (see Banking and Finance Law Daily, March 5, 2026). In a March 26 letter to Kansas City Fed President and CEO Jeff Schmid, Waters requested detailed information about the scope, conditions, and oversight of what the Fed described as a “limited purpose account.”

Waters emphasized that Kraken’s approval marks the first time a cryptocurrency exchange licensed as a Wyoming Special Purpose Depository Institution has received access to Federal Reserve account services. She noted that this development raises significant policy, regulatory, and consumer protection questions, particularly as innovation in digital assets and payments continues to outpace existing statutory frameworks. According to the letter, access to the Federal Reserve’s core payments infrastructure carries public responsibilities that require transparency and clear legal grounding.

In addition, Waters expressed concern that the Kansas City Fed’s public announcement did not explain what a “limited purpose account” entails. She pointed out that neither federal statute nor the Federal Reserve Board’s Account Access Guidelines reference this type of account. The lack of publicly disclosed details, she wrote, makes it difficult for Congress and the public to assess whether risks to the payment system, consumers, and financial stability are being appropriately managed.

Moreover, the letter asked the Kansas City Fed to clarify which Federal Reserve services Kraken’s account permits. Waters specifically requested information on whether the account provides access to services such as FedACH, Check Services, FedCash, or Fedwire Securities Services, and whether the account is eligible for daylight overdrafts, overnight balances, or interest on those balances. She also sought confirmation of any limitations or enhanced risk controls applied to the account.

Waters further questioned whether Kraken’s account is subject to supervision, examination, or reporting requirements beyond those imposed by the Wyoming Division of Banking. She requested a description of all conditions or restrictions attached to the approval, as well as whether those terms were reviewed or approved by the Federal Reserve Board or other Reserve Banks.

Separately, the letter asked whether the decision involved consultation or communications with the Federal Reserve Board, other Reserve Banks, or officials in federal or state government. Waters requested disclosure of any such communications to ensure impartiality in the approval process.

Finally, calling the issue critical to oversight of the financial system, Waters asked for a written response by Apr. 10, 2026. She stated that detailed answers are necessary to ensure that Federal Reserve account access decisions are made consistently with the law and in a manner that preserves a safe and efficient payment system.

Companies: Kraken Financial; Payward Financial

LegislativeActivity: BankingOperations Blockchain ChecksElectronicTransfers FederalReserveSystem FinancialIntermediaries FinTech