<div id="readability-page-1" class="page"><div>More crypto firms are likely to gain access to Federal Reserve master accounts this year following the approval granted to Kraken, despite expected pushback from banks, according to investment bank TD Cowen.&#34;We see this as the first of many Federal Reserve approvals for crypto entities to obtain master accounts,&#34; Jaret Seiberg, managing director at TD Cowen’s Washington Research Group, said in a Thursday note. &#34;As we have written since the election, crypto entity access to master accounts was inevitable under President Trump given his support for the crypto sector. We expect additional announcements in the coming months.&#34;On Wednesday, Kraken’s banking unit, Kraken Financial, became the first crypto company to win access to the Federal Reserve’s core payment systems. The Federal Reserve Bank of Kansas City said it approved a &#34;limited purpose&#34; account for Payward Financial, doing business as Kraken Financial, for an initial term of one year that includes undisclosed restrictions and limitations tailored to Kraken Financial’s business model and risk profile.Kraken qualified for the account because it operates as a Wyoming-chartered Special Purpose Depository Institution, placing it in what regulators describe as the &#34;Tier 3&#34; category. These entities are legally eligible for master accounts but face the &#34;strictest&#34; regulatory scrutiny because they lack a federal banking supervisor, Seiberg said.He added that the Kansas City Fed’s decision suggests regulators have completed a full review of Kraken’s application, though details of the conditions attached to the approval remain limited. According to Seiberg, the Fed will limit Kraken’s access to certain services. He said the central bank is unlikely to grant Kraken access to credit facilities such as overdraft privileges or the discount window. Seiberg also expects Kraken will not earn interest on reserves held at the central bank.&#34;What does make this interesting is that the Kansas City Fed approved the limited master account access before the Federal Reserve Board approved so-called skinny master accounts, which are designed to be easier to approve because they limit access to Fed credit programs and do not pay interest on reserves,&#34; Seiberg said.Banks will fight backBanks are likely to continue opposing such approvals, according to Seiberg. The Bank Policy Institute, which represents major U.S. banks, already filed objections to granting master accounts to crypto-related institutions. The institute said it was &#34;deeply concerned&#34; that the Kansas City Fed approved an account request for a limited-purpose master account — which appears to be a &#34;skinny&#34; account — before the Federal Reserve Board finalized its policy framework for those accounts.Seiberg said Kraken’s approval likely reflects the fact that the Kansas City Fed was able to complete a full review of its application under existing procedures. Other crypto firms whose applications are less advanced may have to wait for the Federal Reserve Board to finalize the streamlined review framework.&#34;Banks will continue to fight to prevent crypto access to master accounts,&#34; Seiberg said. &#34;Though we expect litigation and political pushback, our view remains that crypto entities will have master accounts.&#34;In 2023, the Federal Reserve Board denied the application by Custodia Bank to become a member of the Federal Reserve System, concluding that the firm's proposal was inconsistent with the required factors under the law.Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.© 2026 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. </div></div>

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More crypto firms are expected to gain access to Federal Reserve master accounts following Kraken's recent approval, according to TD Cowen. Jaret Seiberg noted that this approval marks the beginning of many such approvals under President Trump’s administration. Kraken Financial, a Wyoming-chartered institution, received a limited-purpose account with restrictions. Despite banks' opposition, Seiberg believes crypto entities will ultimately secure master accounts, although litigation and political pushback are anticipated. The Federal Reserve previously denied Custodia Bank's application to join the Federal Reserve System.

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More crypto firms likely to get Fed master accounts and banks lack power to block approvals, TD Cowen says