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Cryptocurrency exchange Kraken receives U.S. banking license becoming the world’s first SPDI

Kraken Financial becomes the first Special Purpose Depository Institution in the world.

Image by: Kraken Exchange / Facebook

Fri, 18 Sep 2020, 06:52 am UTC

The Kraken cryptocurrency exchange has recently received a banking license that is recognized under federal law. With its receipt of the U.S. bank charter, the San Francisco-based exchange also made history by becoming the world’s first Special Purpose Depository Institution (SPDI).

In an announcement on Wednesday, September 16, Kraken confirmed the approval of its banking license, according to Cointelegraph. Its new special purpose depository institution unit will be tentatively named Kraken Financial and will be headquartered in Cheyenne.

“The state of Wyoming has approved Kraken’s application to form the world’s first Special Purpose Depository Institution (SPDI), tentatively called Kraken Financial,” Kraken announced, according to Bitcoin.com. “Kraken Financial is the first digital asset company in U.S. history to receive a bank charter recognized under federal and state law.”

With the banking charter, Kraken Financial “will be the first regulated, U.S. bank to provide comprehensive deposit-taking, custody, and fiduciary services for digital assets.” The financial entity will be regulated by the Wyoming Division of Banking.

Kraken Financial will have a permanent physical presence in Cheyenne where its headquarter will be located. However, it will mainly house its back-office employees as it “will operate an online and mobile-first banking model.”

Kraken also revealed plans to expand its banking services on a global scale. The firms said that the SPDI charter will help it expand its operations across the U.S. and “and will also help the broader Kraken organization to service companies around the world,” However, account opening will only be available to U.S. residents initially.

Kraken Financial will initially offer a rather limited suite of services such as digital asset custody, wire transfers, funding services, and demand deposit accounts in its first year of operations. The firm will be adding more services in the coming years such as debit cards, trust accounts, staking, and a complete suite of mobile and online banking services.

Kraken Financial isn’t the only firm seeking approval for a banking license in Wyoming due to the state’s fintech-friendly laws. Another firm that is set to join the niche is Avanti, which is still waiting to receive its license.

“For Wyoming, this is an economic development initiative,” Avanti founder and CEO Caitlin Long said. “Wyoming is looking to diversify its economy to bring in jobs and capital — and revenue — from outside the state. The Kraken charter is the first of what Wyoming hopes are many.”

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