nteresting news for crypto today as exchange Kraken as seemingly been approved to launch a crypto bank in the state of Wyoming under an SPDI charter, strangely announced by Caitlin Long on Twitter, who has been pumping her own bank to come from Wyoming for the past year but has seemingly been beaten to it by Kraken (which she is a shareholder in).

What does this mean for Crypto?

A post on Krakens blog states more details.

'We are thrilled to announce that the State of Wyoming has approved Kraken’s application to form the world’s first Special Purpose Depository Institution (SPDI), tentatively called Kraken Financial.'

'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.'

This is a bold move from the US state, enabling what many other regulators are still looking to avoid or at least approach with considerable caution.

Seemlessly moving money and crypto around your own 'banking' platform has long been the goal for the industry, but regulators have stood firmly in the way. The UK's FCA, while continuing to license crypto brands as payments institutions, has yet to fully accept such scenarios without P2P crypto exchange rather than centralised custody, trading and bank accounts all in one place.

Does the SPDI charter from Wyoming provide the framework to enable Kraken to tackle everything in one place? Who knows just yet, after all Caitlin Long talks a lot but we're yet to see much in the way of solutions from her bank efforts so far. We're likely to see developments from Kraken move much quicker.

The post continues.

'Kraken Financial, as a bank, is required by Wyoming law to maintain 100% reserves of its deposits of fiat currency at all times. If every client were to demand withdrawals of their fiat at the same moment, Kraken Financial would be able to fulfill each withdrawal immediately without regard to how many loans we had outstanding.'

'Kraken Financial will be regulated in largely the same manner as other U.S. banks by the Wyoming Division of Banking. The Division is currently finishing development of the first regulatory manual for banks and digital assets, building on the standards in Wyoming and federal law.'

it will be interesting to see how this develops out further in Wyoming.

What is a crypto bank?

A crypto bank can be one of 2 things - somewhere that accepts crypto related funds, ie a crypto friendly bank account or a form of bank that can custody, exchange, sell cryptocurrencies alongside fiat bank accounts. This hasn't really been done, legally, licensed, regulated as of yet.

Sep 16, 2020
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