Kraken Fed Access Could Drive Bitcoin Services in US Banks: Lummis

TLDR

• Kraken secured access to a Federal Reserve master account through Wyoming’s special-purpose depository institution framework.
• Senator Cynthia Lummis said the approval could advance Bitcoin adoption within traditional banking institutions.
• Kraken became the first digital asset firm to gain access to the Federal Reserve’s payment rails.
• Lummis stated that regulators can now apply safety and soundness standards to digital asset institutions like Kraken.

Kraken has secured access to a Federal Reserve master account through Wyoming’s special-purpose depository institution framework. Senator Cynthia Lummis said the approval brings digital asset firms closer to traditional banking services. She stated that the decision could advance Bitcoin adoption within regulated financial institutions.

Kraken secures Fed Access Through Wyoming Framework

Kraken became the first digital asset company to gain access to the Federal Reserve’s payment rails. The firm used Wyoming’s special-purpose depository institution structure to obtain approval. As a result, the company can now access certain Fed services under regulatory standards.

Lummis said the Federal Reserve recognized the importance of digital assets within the United States. She explained that regulators can now apply safety and soundness standards to firms like Kraken. “The Fed finally recognized the importance of this asset embedded in the US,” Lummis told CNBC.

She added that partial access to the Fed allows integration of the US dollar with digital assets. Therefore, Kraken can begin linking dollar-based services with crypto operations. Lummis said this step helps align digital asset institutions with federal oversight.

The senator predicted closer ties between banks and crypto companies. She said banks may acquire digital asset firms, and crypto companies may purchase banks. “In the future, you’re going to see banks buying digital asset companies,” she said.

She also described a model where banks offer both fiat and digital services. Customers could access US dollar accounts and Bitcoin services under one institution. Lummis said this shift would shape a 21st-century financial services structure.

Bitcoin Adoption and Proposed Crypto Tax Reform

Lummis addressed her proposed tax reform during the interview. She introduced the measure in July to adjust capital gains treatment for small crypto payments. Lawmakers are now reviewing a $300 threshold for exempt transactions.

The proposed de minimis exemption would cover small purchases made with digital assets. Americans could spend Bitcoin on daily transactions without triggering capital gains taxes. Lummis said lawmakers aim to simplify crypto use as a payment method.

“The challenge is trying to figure out how you can use Bitcoin as a means of exchange without paying a capital gains tax on it,” she said. She chairs the Senate Banking Subcommittee on Digital Assets. The subcommittee oversees legislative efforts related to crypto regulation.

Lummis also discussed ongoing negotiations over digital asset legislation. The House approved a version of the bill that seeks clearer regulatory standards. However, Senate discussions continue without a final agreement.

She said Republican members have accepted many Democratic proposals during negotiations. “We’ve given over 90 of the requests that the Democrats had of us to them,” Lummis said. Senate talks remain ongoing as lawmakers seek a consensus on the measure.

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