Kraken Won Historic Fed Approval. So Why Isn’t Its Master Account Live Yet?

Kraken Financial’s Federal Reserve master account is still not live more than four months after approval, bank CEO Brian Mathena told Wyoming lawmakers last week.

In March, the Wyoming-chartered bank became the first crypto firm ever to win one. Winning was hard. Switching it on is proving even harder.

Why the Kraken Fed Master Account Is Not Live Yet

A master account is a bank’s own account at the Fed. It lets a firm move US dollars without a middleman bank. That is why crypto firms want one so badly.

The Federal Reserve Bank of Kansas City approved Kraken’s account on March 4. That made Kraken the first crypto firm plugged directly into the Fed. The bank had waited since October 2020.

Yet the account sits idle. Mathena told Wyoming’s blockchain select committee that the bank is still switching it on.

“Obviously with the uncertainty around the account, we’re now playing a bit of catch up, trying to get the account operationalized and to expand our deposit product and be able to more fully leverage the Fed master account.”

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Kraken never promised a fast launch. Its March announcement described a phased rollout, starting with big institutional clients. Meanwhile, customer wires still run through a middleman. Kraken’s own support pages list Dart Bank as its US dollar wire provider.

The account itself is unusual. The Kansas City Fed approved it for one year only, with undisclosed limits “tailored” to Kraken’s risks. Even Congress wants answers. Representative Maxine Waters pressed Kansas City Fed President Jeff Schmid in March.

Her letter notes the term “limited purpose account” appears nowhere in law or Fed guidelines. She also asks whether Kraken can use the Fed’s ACH network or earn interest on its balances.

The prize is clear, however. A live account would let Kraken settle dollars directly on Fedwire, the Fed’s big-money transfer system. The timing matters too, as Kraken advances its confidential IPO filing.

Tier 3 Fed Access Remains Nearly Impossible

Kraken applied as a Tier 3 firm. That is the Fed’s bucket for state-chartered banks with no federal insurance and no federal watchdog. These applicants almost never win.

Fed Vice Chair for Supervision Michelle Bowman put it bluntly at an American Bankers Association event in March.

“That third level… was a little bit like, I like to say ‘unobtainium,’ right, you just can’t qualify, it’s not, it doesn’t work.”

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The numbers back her up. Just three of 53 Tier 3 or unclassified applicants have ever won approval, per fintech analyst Jason Mikula.

Kraken made headlines by becoming the first crypto "tier 3" applicant to win access to a Fed master account.But the account still isn't live:A traditional Fed master account is a depository account that an institution holds directly at one of the twelve regional Federal…

— Jason Mikula (@mikulaja) July 19, 2026

The other two are a Puerto Rico cooperative and banknote specialist Numisma Bank. Neither touches crypto.

Custodia Bank shows the dark side of those odds. The fellow Wyoming bank applied in October 2020, the same month as Kraken. The Fed said no in January 2023. On July 10, Custodia asked the Supreme Court to step in, calling the denial a “death sentence.”

More delays may follow. Banking trade groups warned that Kraken’s approval came before the Fed finished writing its rules. The Fed then asked Reserve Banks to pause all Tier 3 decisions.

Instead, it is finalizing a payment account proposal for non-banks. Comments close on July 27, and Governor Christopher Waller expects final rules only by year-end.

For now, Kraken holds a first-of-its-kind account it cannot fully use. Whether the one-year pilot goes live before the new rules land remains an open question.

The answer may shape how the Fed treats Ripple’s pending application and everyone else waiting in line.