A crypto firm’s backdoor into the Fed’s payment system raises systemic risks

A crypto-linked firm can now move U.S. dollars through the Federal Reserve’s high-value payment system, a privilege previously reserved for traditional banks. Kraken Financial, a Wyoming-chartered banking subsidiary of the Kraken exchange, received a master account from the Federal Reserve Bank of Kansas City on March 4, 2026, granting it direct access to Fedwire. This allows the firm to process dollar payments and hold limited funds overnight, reducing reliance on intermediary banks and cutting settlement costs.

But the account comes with sharp limitations: Kraken Financial will not earn interest on reserves, cannot access emergency lending, and is excluded from FedNow and the ACH system. The Federal Reserve’s Vice Chair, Michelle Bowman, called the arrangement “a bit of an experiment,” underscoring its provisional and narrowly monitored status.

The approval has triggered backlash. Rep. Maxine Waters, top Democrat on the House Financial Services Committee, has raised concerns about transparency and systemic risk, questioning whether the Federal Reserve followed its own protocols. She has demanded a detailed explanation from the Kansas City Fed by Friday. Critics argue that granting a crypto-affiliated entity access to core financial infrastructure, even in limited form, introduces untested vulnerabilities into the payment system—without public oversight or precedent.