ICBA Pushes Fed to Reassess Kraken's Limited-Purpose Account

The banking group ICBA is pushing the Federal Reserve Bank of Kansas City to reassess Kraken's limited-purpose account, which was approved for an initial one-year term in March. The trade group argues that the account conditions do too little to address operational and legal risks for a crypto-affiliated uninsured entity without consolidated federal supervision.

In a June 18 letter, ICBA urged the Kansas City Fed to review whether Kraken Financial's limited-purpose account remains consistent with the Fed's account-access guidelines. The group also requested that the Fed consider additional limits, suspension, non-renewal, or termination if warranted.

The stakes are high for crypto firms seeking direct access to settlement and reduced dependence on intermediary banks. For bank groups, the issue is whether those rails open to firms outside the full bank supervisory perimeter without stronger off-ramps.