Major Crypto Exchanges Kraken is finally putting its feet in the banking waters with new kraken bank,
“We are building a better kind of crypto and bitcoin bank for our customers,” Said Exchange on your website. wyoming, America-based bank is called Kraken Financial, but “due to high demand, it will be known as Kraken Bank,” it said.
It claims that Kraken Bank is designed for cryptocurrencies through the Wyoming Special Purpose Depository Institution (SPDI) framework, which enables the bank to prioritize asset custody and safekeeping.
It states that,
“We sell USD and crypto assets (eg. Bitcoin), multiple funding and payment options, institutional custody products (qualified custody for advisors and broker dealers), IRAs and more.”
Furthermore, it claims that it can maintain strict regulatory oversight, security standards, and data protection, arguing that,
“We’re willing to bet we’re safer than your current bank.”
Kraken said that all SPDI banks must keep their reserves full, which means users cannot lend money without their permission. In its FAQ, Exchange Forward Explained that an SPDI is a bank that is supervised by Wyoming Division of Banking,
investment will not be insured by Federal Deposit Insurance Corporation (FDIC), but all assets will be available as cash or the least risky, most liquid cash equivalents, meaning there will be no bankruptcy risk that the FDIC is intended to protect, it claimed.
Even in the event of a “bank run”, “we will also maintain significant capital reserves and a surplus of our own capital to cover full balances of all customers”, the company said.
First in SPDI license
The move is possible because Wyoming, USA granted Kraken a license to be a special purpose depository institution in that state. Exchange said,
“We are the first (ever) crypto company to be awarded a US State Banking Charter.”
Marco Santori, Kraken’s chief legal officer, noted the exchange’s bank charter application in September 2020. Said those days.
Then on Monday the exchange said He Kraken Bank is not open yet but is on the way. The company plans for a phased launch, stating:
“We will focus initially on the US roll out services to existing customers in the US, with possible international expansion in the future.”
It will be an online-only mobile device service, with no in-person activity.
Kraken further promises to promote digital asset adoption and better customer experience through its bank through a “more seamless” integration between crypto and the traditional financial system.
the silvergate
It’s very important to note that this follows a (seemingly) series of crypto companies that have crashed and/or faced major financial, legal, and regulatory issues – perhaps most notably for this story, crypto Bank silvergate,
In early February, Silvergate shares saw a sharp decline in pre-market trading following news that US authorities had launched an investigation into its transactions with the fallen crypto giant. ftx and its parent company Alameda Research,
Silvergate was one of the lenders most affected by the FTX collapse, suffering from running a bank And $5.2 billion in debt securities had to be sold at significant losses to cover approximately $8.1 billion in user withdrawals. As a result, it incurred a loss of $718 million, reportedly more than the bank’s total profits since 2013.
And just last week, Silvergate announced that it might not provide its annual financial reports to the U.S. Securities and Exchange Commission ,seconds) over time and that it is evaluating its ability to remain in business.
it was informed of Silvergate was forced to return $9.85 million to the crypto lender soon after. blockfi as part of its ongoing bankruptcy proceedings.
For its part, Kraken reassured its users that its Silvergate risk is nothing to worry about.
Apart from Kraken, many other crypto companies, including coinbase, paxosAnd Galaxy Digital, End His relationship with Silvergate last week.
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learn more:
, Crypto Exchange Kraken In Hot Water With SEC Over Alleged Securities Violations – Here’s What You Need To Know
, Kraken Crypto Exchange Cuts 30% Workforce, Binance CEO Tweets Indirect
, MicroStrategy Claims Minimal Exposure as Crypto.com, Coinbase, and Gemini Pause Transactions with Silvergate Bank – What’s Going On?
, Silvergate in trouble: crypto bank cuts staff by 40% amid 68% drop in crypto deposits
, Why it’s risky to leave your cryptocurrency on an exchange
, How to buy bitcoin in usa?