Kraken Crypto Exchange to Disrupt Traditional Banking with the Launch of Its Own Bank for Digital Assets – Here's What You Need to Know
Major crypto exchange Kraken is finally putting its feet into the banking waters with the new Kraken Bank.
"We're building a better kind of crypto & bitcoin bank for our clients," said the exchange on its website. The Wyoming, USA-based bank is called Kraken Financial, but "due to overwhelming demand, it will be known as Kraken Bank," it said.
It claims that Kraken Bank is designed for crypto, via the Wyoming Special Purpose Depository Institution (SPDI) framework meant to enable the bank to prioritize asset custody and safekeeping.
It stated that,
"We're looking into products like deposit accounts in USD and crypto assets (ex. Bitcoin), multiple funding and payments options, institutional custody products (qualified custody for advisors and broker dealers), IRAs and many more."
Furthermore, it claims it can maintain strict regulatory oversight, security standards, and data protection, arguing that,
"We’re willing to bet we’re more secure than your current bank."
Kraken stated that all SPDI banks must keep their reserves full, meaning that user money cannot be lent out without user permission. In its FAQ, the exchange further explained that an SPDI is a bank overseen by the Wyoming Division of Banking.
The investments will not be insured by the Federal Deposit Insurance Corporation (FDIC), but all assets will be available as cash or the least risky, most liquid cash equivalents, meaning that there will not be an insolvency risk the FDIC is intended to safeguard, it claimed.
"We will also maintain significant capital reserves and surpluses of our own capital to cover the full balance of all clients, even in the event of a “bank run”", said the company.
This move is possible as Wyoming, USA, granted Kraken a license to create a
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