The state of Wyoming recently accepted the application of one of the largest crypto currency exchange services, Kraken. This makes Kraken Financial the first exchange for digital assets with an official banking license in the United States.
Kraken Financial, headquartered in Cheyenne, Wyoming, will become the world's first "Special Purpose Depository Institution (SPDI)" according to a press release. This makes Kraken the first exchange for digital assets in U.S. history to receive a banking license that is recognized under federal and state law. Kraken Financial will thus be the first regulated U.S. bank to offer comprehensive deposit, custody and fiduciary services for crypto currencies.
This announcement comes two months after the U.S. regulatory agency, Office of Comptroller of the Currency (OCC), announced that nationally licensed banks will be allowed to offer crypto-currency custody services.
What is an SPDI
There are different types of banks in the USA. Traditional and local banks exist primarily to keep their customers' savings and deposits safe, as well as to lend them to other customers or smaller businesses as loans.
So-called "custodian banks", on the other hand, offer services that primarily relate to the safekeeping of assets. Thus, they are secure and trustworthy portals for customers who wish to trade in the regulated securities and commodities markets.
A Special Purpose Depository Institution (SPDI) is, as the name suggests, a type of custodian bank specifically for the trading and custody of digital assets. Thus, Kraken Financial will be regulated by the Wyoming Division of Banking in much the same way as other U.S. banks. This also makes it an officially recognized bank at federal and state level.
Big step for Kraken and crypto-adoption
The banking license makes it much easier to build a trusted bridge between the traditional financial system and the digital crypto economy. Kraken is no longer dependent on financial third parties, but will now operate its own independent bank.
As a bank, Kraken Financial is required by Wyoming law to hold 100% of its deposits in Fiat at all times. So if every customer asked for withdrawals of their Fiat currency at the same moment, Kraken Financial would be able to do so no matter how many loans were outstanding.
"We are thrilled to be working in a state that is so much in line with our philosophy and values. Wyoming is a rare and shining example of how well thought-out regulation can drive innovation for FinTech companies." - David Kinitsky, CEO Kraken Financial