Maxine Waters presses Kansas City Fed after Kraken granted Fed access, demands answers House Financial Services Committee Ranking Member Rep. Maxine Waters has formally challenged the Federal Reserve Bank of Kansas City over its recent approval of a “limited purpose account” for Kraken, pushing the regional Fed to explain what it actually means to give a crypto firm direct access to the Fed’s payment system. In a letter to Kansas City Fed President and CEO Jeff Schmid, Waters — the top Democrat on the committee — asked for details about the practical implications of the decision “at a time when Congress has debated whether or not to expand access to the Fed’s payment rails and on what terms.” She asked that the Fed provide information by April 10, 2026 on which Federal Reserve services Kraken can access, any conditions or restrictions attached, and the prudential, anti-money-laundering (AML) and consumer protection considerations weighed before approval. Why this matters Kraken Financial — Kraken’s banking arm — recently became the first crypto company to obtain direct access to the Fed’s core payments infrastructure after the Kansas City Fed approved a Fed master account for the firm. That authorization gives Kraken Financial the ability to settle payments more quickly for large clients and professional traders and provides direct access to Fedwire, the interbank transfer system that processes more than $4 trillion a day. Until now, crypto firms like Kraken relied on intermediary banks to move funds on their behalf. Regulatory and policy questions The Kansas City Fed’s announcement withheld specifics, citing the confidentiality of applicant business information. But Waters flagged a broader governance issue: neither statute nor the Federal Reserve Board’s Account Access Guidelines use the term “limited purpose account,” raising questions about the legal basis and precedent for this type of access. She called access to the nation’s core payments rails a “significant public responsibility” that “should not be extended without full transparency, clear legal grounding, and confidence that risks will be properly managed.” Pushback from traditional banking groups Waters’ letter echoes growing concerns from legacy banks and industry groups. Banking organizations argue that allowing fintechs and crypto firms direct — even restricted — access to the Fed could pose risks to the U.S. payments system and overall financial stability. Last month the American Bankers Association urged the primary banking regulator to delay approvals of crypto bank charters until regulatory uncertainties are resolved. Broader regulatory backdrop Kraken’s “limited” master account resembles the “skinny” master account concept proposed by the Federal Reserve Board of Governors in October 2025 — a restricted account model intended to let payment fintechs and crypto firms tap Fed payment systems while excluding privileges tied to traditional banking, such as access to the discount window. The debates over where to draw the line between bank-like privileges and limited payment access have intensified as other regulatory moves unfolded: in December, the Office of the Comptroller of the Currency approved conditional bank charters for Ripple, Circle, BitGo, Paxos, and Fidelity, moves critics say could blur the line between banking and nonbank payment services and enable regulatory arbitrage. What’s next Waters’ request forces the Kansas City Fed to clarify on record what Kraken can and cannot do with its new Fed access and how regulators evaluated risks. The response — due by April 10, 2026 — will be closely watched by crypto firms eyeing deeper integration with traditional payments infrastructure, banks worried about competition and systemic risks, and lawmakers weighing whether to formalize broader Fed access for nonbank payment providers. For the crypto industry, Kraken’s approval is a milestone; for regulators and lawmakers, it opens a new front in the debate over how to safely integrate fast-moving financial innovation into core national infrastructure. Read more AI-generated news on: undefined/news

#XRP