If you've been reading up on the latest crypto news, you'd be able to see an overlying trend of cryptocurrencies gaining adoption from the top down. As Gil Scott Heron famously said, "The Revolution Will Not Be Televised." This is the quote that best describes what is happening right now between the traditional finance and the cryptocurrency communities.
In a historic move, that will further bridge the two worlds further, US based crypto exchange Kraken has been given the go ahead to form its own bank. Last month, the state of Wyoming approved an application to form a SPDI, or Special Purpose Depository Institution.
This is the first of its kind, and different from a traditional bank in that Kraken will operate more as a custodial bank of their customers' digital assets. This banking wing of Kraken will be named Kraken Financial. As a custodial bank, this means the state of Wyoming requires Kraken to hold 100% of the assets deposited onto the platform, so were all of their users decided to withdraw, they could fulfill each order immediately.
This is one of the major issues with the traditional banking system, as banks have been given free reign to do nearly anything they want with your money once it is in their hands.
"From paying bills and receiving salaries in cryptocurrency to incorporating digital assets into investment and trading portfolios, Kraken Financial will enable Kraken clients in the US to bank seamlessly between digital assets and national currencies," the company said on it's official blog, announcing the exciting news.
Kraken is one of the oldest exchanges in the cryptocurrency space, launched in 2011. Within that span, many exchanges have come and gone, so that must have been a definitive factor in the state of Wyoming being optimistic about this move.
Wyoming is actually a very crytpo-friendly state. In the past three years,
The Cowboy State enacted 13 blockchain laws, making it an ideal location for crypto startups to set up shop, which is exactly what Kraken did before this deal was announced.
While oppressive New York makes it more difficult for crypto companies to obtain its BitLicense, Wyoming does the opposite. Even Kraken's CEO David Kinitsky agrees stating, “We’re thrilled to work in a state so aligned with our philosophy and values. Wyoming is a rare and shining example of how thoughtful regulation can drive innovation for FinTech companies.”
Their vision Wyoming and Kraken have in bridging together the blockchain and banking worlds will be significant for the entire country, then the world. Kraken is among one of the most popular apps for investors to buy cryptocurrencies with fiat. Users can link their bank accounts to do so, and they are. When Kraken launched their futures trading feature, they saw over $1 billion in volume.
In its initial phase, Kraken Financial will only be available to US citizens. Kraken will start providing digital asset custody, demand/deposit accounts (DDAs), and wire transferring initially. Looking towards the future, they're focused on bringing more features such as a complete mobile online banking suite, account management services, and of course a debit card so clients can spend their crypto funds.
If you'd like to do more research on Kraken, here is an excellent review of the platform from Nicolás Morles.
Overall, we see this is a revolutionary step in bringing more people to the Crypto Promised Land. Soon, many of us who use Kraken Financial will be able to pay our bills in crypto, pay our staff in the crypto of their choice, and gain the peace of mind in knowing our funds are being kept in a safe place.
If you're new to the crypto world, check out my free dictionary, that teaches you all the terms you need to know to stay hip to the game.