Kraken becomes world’s first digital asset bank

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Kraken has just been approved by the state of Wyoming to form the world’s first Special Purpose Depository Institution (SPDI) and was granted a charter to Wyoming’s newest state-chartered bank, “Kraken Financial.”

🚨🚨🚨*BREAKING*🚨🚨🚨@Krakenfx just won approval to create America’s first crypto bank.

World, please meet Kraken Financial. Kraken Financial, world.

Wait, a what? Kraken is a BANK?! How did this even happen?!

Allow me to threadeth. 👇

— Marco Santori (@msantoriESQ) September 16, 2020

 An SPDI is similar to a custody bank; it primarily focuses on storing assets, fiduciary management, and conducting a variety of transactions. In addition, SPDIs are prohibited from making loans with customer deposits of fiat currency, and they must keep 100% of their assets in reserve.

What does this mean?

In its official announcement, Kraken said:

Kraken Financial is the first digital asset company in U.S. history to receive a bank charter recognized under federal and state law, and will be the first regulated, U.S. bank to provide comprehensive deposit-taking, custody, and fiduciary services for digital assets.

It added:

From paying bills and receiving salaries in cryptocurrency to incorporating digital assets into investment and trading portfolios, Kraken Financial will enable Kraken clients in the U.S. to bank seamlessly between digital assets and national currencies.

During their first year of operation, Kraken says they will offer digital asset custody, demand/deposit accounts (DDAs), and wire transfer and funding services. Kraken also believes that they will be able to provide a number of services in the future such as: 

• Digital asset staking
• Trust account and administration
• Enhanced digital asset custody offerings
• A complete online and mobile banking suite of products
• A debit card that clients can use to spend their crypto funds
• Account management services 
• Bank comfort letters
• Deposit verifications, 
• Proof of funds attestations
• additional retail, wealth management, and treasury services, and 
• other asset classes such as securities.

A big step for the digital currency industry

It is beneficial for the blockchain and digital currency industry to have a digital asset company at the table with traditional financial institutions, and it’s also a good thing in educating regulators that there is good to gain from a properly regulated tokenized world—something that Bitcoin SV is uniquely able to provide.

Becoming the world’s first digital asset bank is significant for Kraken as anything that it does in the world of digital currency banking will set a precedent for all those who follow. That said, Kraken still needs to clean up its act to gain legitimacy; fooling a regulator temporarily does not purge all the alleged market manipulation, Ponzi token promotion and money laundering from its history and current operations. 

Editor’s note: This article has been updated.