Kraken has received approval for a Federal Reserve masteraccount, allowing its banking unit, Kraken Financial, to access the Fed’s corepayment systems directly. The move makes it the first U.S. digital asset bankto operate on the same payment rails as traditional financial institutions.The approval comes as Kraken has filed a confidential draftregistration with the U.S.Securities and Exchange Commission for a proposed initial public offering.The filing follows an $800 million funding round that valued the company at $20billion, including a $200 million investment from Citadel Securities andcontributions from Jane Street and DRW Venture Capital.Kraken Rolls Out Fed-Connected Banking PlatformKraken Financial’s Fed account follows more than five yearsof regulatory engagement with U.S. and Wyoming authorities. It enables the bankto connect directly to Fedwire without relying on intermediary banks. This isexpected to streamline fiat transfers for institutional clients and reduceoperational complexity.Arjun Sethi, co-CEO of Payward and Kraken, said the accountallows the bank to “settle directly on Fedwire, reduce dependency oncorrespondent banks, and integrate regulated fiat liquidity directly intodigital asset markets.” He added that it positions Kraken Financial as adirectly connected participant in the U.S. banking system, rather than aperipheral one, supporting more efficient operations for institutional clients.Kraken Financial plans a phased rollout, initially focusingon institutional client activity at Kraken. The capabilities will be graduallyintegrated into Payward’s broader platform in coordination with regulators.Bank Maintains Compliance While Scaling OperationsAs a Wyoming Special Purpose Depository Institution, KrakenFinancial operates on a full-reserve basis. The bank maintains liquid assetsequal to or exceeding 100% of client fiat deposits. JUST IN: Bitcoin exchange Kraken becomes first crypto bank to receive a Federal Reserve master account 🤯This makes Kraken the first digital asset bank in U.S. history to gain direct access to the Federal Reserve’s payment infrastructure 🚀 pic.twitter.com/ip579ywQzA— Bitcoin Magazine (@BitcoinMagazine) March 4, 2026It will continue to workwith the Federal Reserve and Wyoming regulators as it expands its paymentcapabilities.Payward, Inc., which powers Kraken, operates a unifiedinfrastructure platform supporting multiple products across asset classes. Itssystem combines a global liquidity pool, a unified risk and margin engine, acentral collateral and settlement system, and a compliance and licensingframework. The structure is designed to allow the company to scale whilemaintaining regulatory and operational standards.This article was written by Tareq Sikder at www.financemagnates.com.