On Sept. 16, Kraken announced that it had attained regulatory approval to form the world’s first fully regulated crypto bank.
The new entity, which will be called Kraken Financial, will be a Special Purpose Depository Institution based in the U.S. state of Wyoming.
On Sept. 18, the CEO of the newly certified bank, David Kinitsky, spoke with the host of the Unconfirmed podcast, Laura Shin, at length. In the interview, Kinitsky shed more light on why Kraken decided to launch a crypto bank and what specifically they would be able to do with this new status.
According to Kinitsky, Kraken has three primary objectives for becoming a bank. “The first is regulatory, we’re going to be in a much better position as a bank, in a consolidated fashion, without having to go state by state in a money transmitter regime or something like that, and we’ll be able to conduct certain activities that we otherwise couldn’t,” said Kinitsky.
The second is infrastructure and the ability to get good partners. According to Kinitsky, this one could prove particularly crucial as crypto firms have a history of precarious banking relationships.
As he put it, “Kraken is lucky to enjoy solid third party banking relationships, but the fact of the matter is it’s very important for us to get direct access to the federal payment system and be able to integrate that into our customer experience.”
Last, he stated, “this is an entirely new product and distribution platform.” By this, Kinitsky refers to an expanded ability to offer products and service customers, especially institutional ones.
Benefits For Users
When queried about what this means for crypto users, Kraken Financial’s CEO painted an optimistic picture.
Saying that although not much would change in the near term, aside from updates on the back end, users could expect significant “quality improvements” over time. This means things like seamlessly integrated funding and withdrawal mechanisms, and ultimately products like debit cards, yield accounts, or individual retirement accounts.
Kraken isn’t alone in taking strides to become a crypto bank. BlockFi is working on building a line of wealth-management products for crypto, including credit accounts.
Although Kraken’s move may be controversial to some, it was largely greeted as a positive development. More than a few Redditors noted the benefit of having a crypto company at the table with traditional financial institutions, and the potential for educating regulators.
As for Kraken Financial, Kinitsky described the current state as “a commencement, not a conclusion.” According to him, a full launch date for the bank is expected later in 2020 or quarter one of next year.