On 16 September 2020, Kraken released an announcement on being approved as the world’s first Special Purpose Depository Institution (SPDI) by the State of Wyoming, US.
The announcement of Kraken being a bank or called Kraken Financial is a big revelation not only to the cryptocurrency industry but the financial sector as well. It will also be an example for future reference around the world.
What is SPDI?
SPDI is a regulation enacted by the Wyoming Legislature in 2019. It allows a bank to receive deposits, fiduciary activities, safekeeping, asset management, and servicing. Similar to a custody bank focusing on digital assets like virtual currencies, digital securities, and utility tokens.
Even so, SPDIs can accept the traditional type of assets. However, the regulation prohibits SPDIs from making loans using customer’s fiat deposits. SPDIs are not required to obtain insurance from the Federal Deposit Insurance Corporation but able to do so.
Being an SPDI, Kraken Financial need to maintain 100% reserves of fiat currencies at all time as per required by the Wyoming law. Like other banks, Kraken Financial is regulated by the Wyoming Division of Banking.
What Kraken Financial offers?
In Kraken Financial’s blog, it will offer crypto-focused services in the first year. Customers will be able to store their cryptocurrency, Demand Deposit Account (DDA), wire transfer, and funding services.
While other banks only allow customers to open an account for fiat, Kraken Financial offers fiat and digital assets. These services will enable the public to engage cryptocurrency widely through bank payment, transfer, or even receiving a paycheck through it.
Kraken Financial aims to be the bridge between crypto and traditional finance through a seamless banking experience. It will also offer more product and services in the future, such as enhanced digital asset custody offerings, digital asset staking, trust account, mobile banking, debit card, and services for corporate clients.
While some countries are trying to resist cryptocurrency, the approval of Kraken Financial will be the center of attention from around the world. Apart from that, there will be questions on how it will impact economic growth for the country and its people.
Shouldn’t we be our own bank? How should we react to this?