The crypto industry is evolving and a lot of new innovations in this space are proof of that. In one such major move, crypto exchange Kraken is launching a bank in Wyoming, under a new regulatory framework in a bid to expand its product suite.
According to an announcement on September 16, Kraken Financial will be headquartered in Wyoming and will be regulated by the Wyoming Division of Banking under the Special Purpose Depository Institution.
Under this new system designed for cryptocurrency companies, Kraken will be able to offer some banking functions to its customers and also act as the primary bank behind the exchange, which until now were third-party institutions.
Dave Kinitsky, CEO of Kraken Financial, said:
“For Kraken, this represents a better banking infrastructure. This will require less reliance on third-party providers and offers more certainty from a regulatory perspective and will allow us to launch new products for new customer segments.”
“Having an affiliate company allows us to more closely integrate this into our product experience,” he added.
This move would make transactions to and from the exchange much faster for the clients as third-party transfers are much slower.
Clients would also be able to use their Kraken Financial bank accounts just like their regular bank accounts.
Per the press-release, some of the services include offering clients the ability to deposit USD and crypto assets, which “will be seamlessly integrated into the existing exchange services, providing clients better funding infrastructure, a better experience and enhanced regulatory clarity.”
“There’s going to be a phased approach to this,” Kinitsky noted. “In the first phase we expect to be the bank of choice for our clients and in phase two or three we will begin offering new services and products.”
Furthermore, the company would also be able to look at offering new services in the future like a crypto debit card, a yield account product, or an IRA product.
The firm’s banking status would also enable it to offer services in stock, derivatives, or commodities trading, Kinitsky added.
“Finally, we expect to be able to offer additional retail, wealth management and treasury services (and potentially other asset classes such as securities), so stay tuned!” the release said.
However, there are still some legal complications that need to be addressed before the exchange can launch its bank.
The firm is currently lining correspondent banking partners and opening an account with the Federal Reserve. But it’s still not clear whether every state will respect the status of Kraken’s new bank charter.
“We are on route and we expect to get the charter approval on Wednesday and then we lock-up those relationships and move to launch,” said Kinitsky. “We expect reciprocity from other states and have talked with a number of them and expect the lion share to have reciprocity as they do for other out of state-chartered banking institutions.”