Kraken's Application for a Master Account with the Federal Reserve
Kraken has a special type of fintech banking license in Wyoming; with an application at the Federal Reserve to receive a master account which would allow them direct access to the traditional banking system. The Fed has basically done nothing with the request, same as with many other requests by fintech companies in the past.
There's controversy about capital requirements and risk, raised by a consortium of traditional banks who probably don't want to see such a development. Kraken argues that their Wyoming licesnse doesn't permit them to issue loans on the basis of deposits or to engage in fractional reserve lending like traditional banks. They claim their intention is to 100% reserve customer USD in a Fed master account, and not engage in any time of "maturity transformation risk" (investing in bonds for example, to gain yield); and thus, hope to overcome the objections raised by the traditional banking cartel.
Supposedly there is some movement by the Fed to try and resolve this, having issued proposed guidelines for evaluating requests for accounts at Federal Reserve banks on May 5th, with a 60 day comment period.
I find all of this to be quite interesting, and peripherally related to Monero, of course being that Kraken has the largest list of direct XMR-fiat pairs; and would be the first crypto exchange to receive a Fed master account. This would also be interesting in light of the US Office of the Comptroller of the Currency guidance that all "Independently Verifiable Node Networks" (IVNNs, aka blockchains) are permissible for banking purposes, *even ones with enhanced AML risks*.
If approved, this would largely invalidate the false narratives about exchanges being forced to ban XMR, would be a positive development for both Kraken and Monero. I like the idea that if I have to use a CEX from time to time; that I can actually *trust* that they're holding my dollars appropriately as 100% reserved, regulated as an actual bank; rather than merely as a money tra...