Cryptocurrency exchange Kraken has obtained approval from the crypto-friendly State of Wyoming to create the world’s first Special Purpose Depository Institution (SPDI), tentatively called Kraken Financial.
The idea to become the bridge between the crypto economy and the existing financial ecosystem first came into existence in 2016 through the Delaware Blockchain Initiative, shared Marco Santori, Chief Legal Officer Kraken. Caitlin Long, founder, and CEO of Avanti tweeted,
“What a win-win for crypto & Wyoming! As of **NOW** Kraken has a US bank charter—a 100% reserves-required, audit required (w/ ProofOfReserves), custody via legal bailment, no rehypothecation type of bank!”
Source: @MSantoriESQHeadquartered in Cheyenne, Wyoming, Kraken Financial is the first digital asset company in the US to receive a bank charter. It will be able to provide deposit-taking, custody, and fiduciary services for digital assets. David Kinitsky, CEO of Kraken Financial said,
“Wyoming is a rare and shining example of how thoughtful regulation can drive innovation for FinTech companies.”
As a bank, by Wyoming law, Kraken Finance is required to maintain 100% of reserves of its deposits of fiat currency at all times and will have to meet every withdrawal demand of its client no matter the loans outstanding.
This development means Kraken’s reliance on third party financial institutions will be reduced, and they will be able to “launch a new wave of innovative products for our users.”
The exchange will start with the US first and then expand globally, which means for now only it will only offer accounts to US residents. Users can start with USD deposits and withdrawals and digital assets custody.
Over the next few years, the company plans to expand its services to digital asset staking, trust account, online and mobile banking, a debit card, and Proof of funds attestations, among other things. Kraken said in its official announcement,
“We expect to be able to offer additional retail, wealth management and treasury services (and potentially other asset classes such as securities).”