Cryptocurrency exchange Kraken is continuing in its pursuits to introduce a new crypto bank in spite of the recent SEC restriction on the exchange’s staking service and increased regulatory scrutiny in the country.
Kraken Support confirmed to a Twitter user that Kraken Bank is still in development, with an initial offering to customers in the US and potential future global expansion.
Hey Wayne,
Kraken Bank is not open yet but on its way! The offering will initially be available to existing Kraken clients in the USA with potential international expansion in the future.
You can subscribe to Kraken Bank updates here 👉https://t.co/m3yPoGpu2g
Kraken Support 🐙
— Kraken Support (@krakensupport) March 6, 2023
Kraken Bank Is Underway
The international exchange announced the official launch of a crypto bank in Wyoming, recognized as a special purpose depository institution (SPDI). The Wyoming SPDI framework enables the bank to provide careful consideration to regulatory monitoring, data security and protection, and asset custody and safekeeping.
The bank intends to provide wire transfers, debit cards, “enhanced” crypto custody products, staking services, funding services, and a mobile banking app, among others.
“From paying bills and receiving salaries in cryptocurrency like Bitcoin to incorporating digital assets into investment and trading portfolios, Kraken Bank will enable Kraken clients in the U.S. to bank seamlessly between digital assets and national currencies,” it said in a 2020 statement.
Wyoming granted the cryptocurrency exchange a license to establish a cryptocurrency bank in the state in 2020 under the provisional name Kraken Financial. But it will now be known as Kraken Bank because of the overwhelming demand.
Regulatory Concerns
A new bank spawned from the crypto sector could arrive at a difficult time for an industry still reeling from the massive effects of FTX’s demise. Over the past few weeks, there have been a number of enforcement actions, and regulatory uncertainty is growing.
Gary Gensler, the chair of the Securities and Exchange Commission, stated last month that the Kraken settlement, which included $30 million in fines, should “put everyone on notice in this marketplace.”
Regulators have also heightened their monitoring of Silvergate and Signature, two significant crypto-friendly banks, in the wake of the recent collapse of FTX.
Silvergate disclosed a $1 billion loss in the fourth quarter of 2022, indicating that the figure could be revised higher, prompting several cryptocurrency companies to cut ties with the crypto-friendly American bank last week.
Subsequently, on March 3, it declared that it was ending its payment network for digital assets, citing a “risk-based decision” as the basis for the closure. The move comes after the bank’s stock dropped over 59% in the previous few days due to fears of possible insolvency.
