US Representative Maxine Waters has asked the Federal Reserve Bank of Kansas City to explain its decision to approve Kraken Financial’s limited-purpose master account. 

Her request puts fresh attention on how crypto-linked firms may gain access to the US payment system and what safeguards apply when the Federal Reserve reviews those applications.

Waters, the top Democrat on the House Financial Services Committee, sent a letter to Kansas City Fed President Jeff Schmid on Thursday. She asked him to respond by April 10 with details on what Kraken’s approval allows in practice and which Federal Reserve services the company can use.

She also asked what conditions or limits apply to the account. Her letter requested information on anti-money laundering checks, consumer protection reviews, and the legal basis behind the approval process.

Focus turns to access to Fed payment rails

Kraken Financial received a limited-purpose master account from the Federal Reserve Bank of Kansas City earlier this month. The move drew attention because crypto-linked firms have sought direct Federal Reserve access for years.

The account could give Kraken access to Fedwire, the Federal Reserve’s main payment network. That system allows institutions to move funds on the same core rails used by banks and credit unions across the United States.

Waters said the public notice left important questions unanswered. In her letter, she wrote that the Kansas City Fed’s announcement “does not disclose specific information” about Kraken’s access to Federal Reserve financial services because of “the confidentiality of business information provided by applicants.”

Waters said direct access to the Federal Reserve’s payment system raises policy, regulatory, and consumer protection questions. She argued that the Federal Reserve must show that any approval follows the law and applies the same standards to all applicants.

She wrote that “answers to these questions are critical” to ensure the approval process works “with impartiality” and supports “a safe and efficient payment system.” Waters also said new activity in digital assets, tokenization, payments, and artificial intelligence is moving faster than many existing laws.

Crypto firms continue push for master accounts

Kraken is not the only crypto-linked company seeking this type of access. Custodia Bank, Anchorage Digital Bank, and Ripple’s Standard Custody & Trust Company have also pursued Federal Reserve master accounts.

Waters has often taken a cautious position on crypto policy. Advocacy group Stand With Crypto lists her as “strongly against crypto,” citing past statements and votes against crypto legislation. Her latest letter now places the focus on transparency in how the Federal Reserve handles crypto-related account approvals.