U.S. Rep. Maxine Waters, the ranking Democrat on the House Financial Services Committee, is questioning the limited “master account” obtained by crypto exchange Kraken from the Federal Reserve Bank of Kansas City, which she said raises potential consumer protection issues and questions about the approval process.
Waters, who is likely to return to chair the committee if Democrats regain a majority in the House in this year’s elections (put at an 84% chance in current Polymarket betting), sent a letter Thursday to the president of the Kansas City branch of the Fed system, Jeff Schmid. She suggested that the unusual approval of a “limited purpose account” at Kraken, which allows the firm to become the first to win direct access to the Federal Reserve’s payment services, is on unclear legal grounds.
“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,” she wrote in the letter. “Accordingly, I am writing to request that you clarify the terms of Kraken’s account access approval and provide additional information about the process and considerations informing the approval.”
The new account gave the American firm full access to the same payment rails on which much of the traditional financial system operates. Several crypto-native firms have sought that access, but are still awaiting approval, and are closely watching a separate effort at the Federal Reserve Board in Washington to write rules that could govern a “lean” master account for such firms. That process is still in the early stages.
When the Kansas City Fed was asked to comment on Waters’ inquiries, a spokesman said the bank has “received the letter and will review it.”
The Kansas City regional bank — one of 12 such banks nationwide — announced earlier this month that Kraken would get the long-requested access. Schmid said at the time that his bank sought to maintain a system that “supports a level competitive field and strengthens the stability and resilience that has underpinned the Federal Reserve’s payment system offerings throughout its history.”
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