Maxine Waters, who serves as the main opposition leader in the Financial Services Committee in the American Congress, brought up that there are question marks about the transparency of the “limited authority master account” approval that the cryptocurrency exchange Kraken received from the Kansas City Central Bank. Waters raised concerns about consumer protection and whether the approval process is transparent.
The legal basis for account approval is being discussed
Waters is among those expected to return to the committee chair if Democrats regain the majority in the elections to be held later this year. In his letter to Jeff Schmid, President of the Federal Reserve Bank of Kansas City, the congressman emphasized that the “limited authority account” type for Kraken is not clearly defined in either U.S. law or the Federal Reserve’s current account access rules.
With this account, Kraken became the first crypto company to gain direct access to the central bank payment infrastructure. To date, many crypto-focused institutions have made a similar application; However, the applications did not progress for a long time after the process started.
In his letter, Waters requested an explanation from the bank about the reasons for the approval decision and how the process was run. He also asked for clarification of the legal basis of such accounting practices.
Statements from banks and authorities
The Federal Reserve Bank in Kansas City is known as one of 12 regional central banks across America. The institution announced a while ago that it had given Kraken access to the payment system that it had been requesting for a long time. Jeff Schmid, the bank’s president, stated in his evaluation at the time that they acted with an approach that considered the stability of the system and competition. In Schmid’s statement, it was emphasized that maintaining equal competition conditions in the payment infrastructure is among his priorities.
Kansas City Federal Reserve Bank Spokesperson shared the opinion, “The letter has reached us, we will make the necessary evaluation.”
The process of preparing a general regulation regarding “limited” or “narrow scope” accounts by the Federal Reserve Board and other affiliated institutions is still in the beginning stages. Therefore, this account model submitted to Kraken may serve as an example for similar applications in the future, but the situation seems to remain unclear until definitive rules are established.
Kraken stands out as an American-based cryptocurrency exchange. Jeff Schmid serves as the current president of the Kansas City Fed and is known for the group’s pursuit of competition and stability in the financial system.
