US Representative Maxine Waters, the ranking Democrat on the House Financial Services Committee, has formally demanded answers from the Federal Reserve Bank of Kansas City regarding its recent approval of a limited-purpose master account for Kraken Financial.
In a letter dated Thursday, Waters requested Kansas City Fed President Jeff Schmid to respond by April 10. She seeks detailed clarification on several key points: what Kraken's approval means in practical terms, which specific Federal Reserve services the crypto exchange can now access, the conditions or restrictions attached to the account, and what anti-money laundering (AML) and consumer protection measures were considered during the approval process.
The approval, granted earlier this month, was hailed as a significant milestone for the cryptocurrency industry. A master account provides direct access to Fedwire, the Federal Reserve's core payments system. This access allows Kraken to move money using the same infrastructure as traditional banks and credit unions, potentially streamlining operations and reducing reliance on intermediary banks.
Waters expressed concern over the lack of public disclosure, noting, "The Kansas City Fed’s announcement does not disclose specific information about Kraken’s access to the range of Federal Reserve financial services due to the confidentiality of business information provided by applicants." She emphasized that answers are critical to ensure the approval process is conducted lawfully, impartially, and in a manner that fosters a safe and efficient payment system.
The lawmaker argued that Kraken's access raises substantial policy, regulatory, and consumer protection concerns. "Innovations in payments, digital assets, tokenization, and even artificial intelligence are rapidly outpacing statutory frameworks developed to mitigate risk, promote competition, and protect consumers in a traditional financial environment," Waters wrote. She stressed that full transparency and a clear legal foundation are necessary to properly manage associated risks.
This development occurs as several other crypto-native US companies, including Custodia Bank (founded by Caitlin Long), Anchorage Digital Bank, and Ripple (via its Standard Custody & Trust Company), have also been pursuing Fed master accounts for years, with Custodia recently filing a court petition to renew its bid.
Waters' stance on crypto is documented as adversarial by advocacy groups. Stand With Crypto, a crypto advocacy organization, scores US politicians based on public statements and voting records. The group lists Waters as "strongly against crypto," citing five anti-crypto statements and six votes against crypto-related legislation, including the Digital Asset Market Clarity Act and the GENIUS Act.
