Morning Minute: Kraken Cracks the Fed
TL;DR
Kraken becomes the first crypto-native company to secure a Federal Reserve master account, granting direct access to Fedwire. This 'watershed moment' enables faster fiat transactions and signals regulatory shifts, despite banking industry opposition.
Key Takeaways
- •Kraken Financial received approval for a Federal Reserve master account, allowing direct access to Fedwire for real-time dollar settlements.
- •The approval is a 'skinny' master account, meaning Kraken cannot earn interest on reserves or access emergency lending facilities.
- •Traditional banking groups criticized the decision, warning it could threaten U.S. financial stability.
- •Kraken's approval is seen as a pilot for broader crypto industry access, with companies like Ripple and Circle likely to follow.
- •Users benefit from faster, more reliable fiat deposits and withdrawals, reducing wait times for fund clearance.
Tags
Morning Minute is a daily newsletter written by Tyler Warner. The analysis and opinions expressed are his own and do not necessarily reflect those of Decrypt. Subscribe to the Morning Minute on Substack.
GM!
Today’s top news:
- Crypto majors pump another 2-4% across the board; BTC at $73k
- BTC ETFs see $1.15B in inflows to start March
- Kraken gains access to Fedwire in “watershed moment” for crypto
- a16z targets $2B for its 5th crypto fund, crypto vc raises at $4B+ for 2026
- Tether invests $50M into Eight Sleep at $1.5B valuation as it expands into AI health & infra
🏛️ Kraken Cracks the Fed
For the first time in U.S. history, a crypto-native company just got a seat at the Federal Reserve’s table.
And the banking industry is furious about it.
📌 What Happened
Yesterday, Kraken Financial received approval for a Federal Reserve master account from the Federal Reserve Bank of Kansas City.
The account grants direct access to Fedwire, the Fed’s real-time settlement network. Until now, Kraken had to route all dollar transfers through intermediary banks. That’s over.
The approval is limited, meaning Kraken won’t earn interest on reserves held at the Fed, and it can’t tap the Fed’s emergency lending facilities. It’s a so-called “skinny” master account, similar to a concept the Fed floated last year.
But the significance is clear: Kraken can now settle dollar payments itself, on the same rails used by JPMorgan, Bank of America, and every other major U.S. bank.
Traditional banking groups didn’t wait long to respond.
The Bank Policy Institute and other trade groups immediately criticized the decision, warning it could threaten U.S. financial stability.
🗣️ What They’re Saying
“This milestone marks the convergence of crypto infrastructure and sovereign financial rails.” - Arjun Sethi, co-CEO of Kraken
Sen. Cynthia Lummis (R-WY) called it a “watershed moment for the digital asset industry.”
🧠 Why It Matters
Custodia Bank fought the Fed in court for years to get this and lost.
Now Kraken has it, and that’s a pretty big signal about where the regulatory environment stands under the current administration.
Kraken’s approval is explicitly being treated as a pilot for the “skinny” master account framework.
Ripple, Circle, and Paxos already have conditional OCC charters and are laying in wait. Likely just a matter of time until those dominoes fall as well.
As for the users, they are the big winners here.
Faster, more reliable fiat deposits and withdrawals are here. No more waiting 5-7 days for funds to clear (we all know how painful that can be when markets are pumping).
And the banks? Well, they may have lost another battle with the crypto companies…
🌎 Macro Crypto and Markets
- Crypto majors are very green again up 2-4%; BTC +1.3% at $73k; ETH +2.2% at $2,116; SOL +1% at $90.80
- Pi (+14%), H (+12%) and Kite (+10%) led top movers
- Bitcoin market conditions are drawing comparisons to the FTX bottom, with analysts at FalconX pointing to a 19% rebound from the $60K support level and peak capitulation in social sentiment as signs a floor may be forming
- Kraken's banking arm became the first crypto firm to secure a Federal Reserve master account, gaining direct access to Fedwire and the same payment rails used by traditional banks
- White House crypto advisor Patrick Witt publicly pushed back on JPMorgan CEO Jamie Dimon’s call to regulate stablecoin issuers like banks
- a16z crypto is targeting a $2B raise for its fifth fund, bringing crypto fundraises announced in 2026 to $4B+
- Cathie Wood’s Ark Invest bought $4M in Coinbase and $12M in Robinhood on Tuesday’s dip driven by Iran war uncertainty (both rebounded sharply Wednesday, COIN +13%, HOOD +9% from open)
Corporate Treasuries & ETFs
- The Bitcoin ETFs saw $462M in net inflows on Wednesday, with ETH ETFs seeing $169M in inflows
- STRC moved another 1.34M shares on Wednesday, giving Saylor capital to buy another 718 BTC
- Morgan Stanley named BNY Mellon and Coinbase Custody as custodians for its pending spot Bitcoin ETF in an amended S-1
- Bitwise donated $233K of Bitcoin ETF profits to open-source Bitcoin developers
Meme Coin Tracker
- Meme majors were mostly green; DOGE +1%, SHIB +0.4%, PEPE -3%, TRUMP -2%, PENGU +1%, SPX -4%, FARTCOIN +2%
- WAR (+44%), Lobstar (+85%) and memecoin (+60%) led onchain movers
💰 Token, Airdrop & Protocol Tracker
- Tether invested in Eight Sleep at a $1.5B valuation, helping the AI-powered sleep tech startup to develop new health features
- Sui’s native dollar stablecoin, USDsui, launched with a unique structure that reinvests income from its backed assets into SUI buy and burns
- USDai’s CHIP sale ended with $19.4M raised
- Backpack announced a waitlist for access to its IPO available onchain
- Polymarket removed its nuclear bomb market after public outcry
- Paradex published a tokenomics update ahead of its DIME token airdrop going live today
🚚 What is happening in NFTs?
- NFT leaders were mostly flat with ETH pumping; Punks even at 29.9 ETH, Pudgy -1% at 4.45 ETH, BAYC even at 6 ETH; Hypurr’s -1% at 450 HYPE
- Moonbirds (+10%) led top movers; Normies +21%
- Cambria announced a $1M raise at $30M FDV