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Kraken Was Just The Start Of Wyoming’s Cryptocurrency Bank Approvals

Kraken Financial is the first company in Wyoming or elsewhere in the U.S. to receive a charter to operate a special purpose depository institution. Kraken Financial, with its new headquarters in Cheyenne, plans to provide clients with “an online and mobile-first banking model.”

With the charter approval, Gov. Mark Gordon said that Wyoming “is taking its rightful place globally as a FinTech leader.”

Gordon said in a statement: “Today, Wyoming became the first U.S. state to approve a banking charter for digital assets. Wyoming’s new charter will allow those using digital assets, like cryptocurrency, to access reliable financial services, protect consumers and allow businesses a way to hold digital assets safely.”

Kraken, the San Francisco based cryptocurrency trading platform, announced last week that it had received a federally-recognized banking license for the U.S. The company plans to offer cryptocurrency banking services globally.

Kraken announced last week it received a U.S. bank charter. “The state of Wyoming has approved Kraken’s application to form the world’s first Special Purpose Depository Institution (SPDI), tentatively called Kraken Financial,” the company detailed. “Kraken Financial is the first digital asset company in U.S. history to receive a bank charter recognized under federal and state law.” Wyoming Governor confirmed the news on Twitter: 

According to the company’s press release, Kraken will be the first regulated U.S. bank to provide comprehensive deposit-taking, custody, and fiduciary services for digital assets.

Last year, the Wyoming Legislature enacted HB 74 last year, authorizing the chartering of Special Purpose Depository Institutions. Kraken describes these as custody banks for digital assets.  Wyoming law requires Kraken Financial to maintain 100% reserves of its fiat deposits. 

“If every client were to demand withdrawals of their fiat at the same moment, Kraken Financial would be able to fulfill each withdrawal immediately without regard to how many loans we had outstanding,” the company stated. 

The Wyoming Division of Banking will regulate Kraken Financial, which will have a permanent physical presence in Cheyenne with back-office teams and functions. Kraken will operate an online and mobile-first banking model.

Kraken Financial accounts will at first be limited to U.S. residents, but the company plans to expand globally. Kraken plans to offer digital asset custody, demand deposit accounts, wire transfers, and funding services will be available. The company will add more services in the coming years, including staking, trust accounts, debit cards, and a complete suite of online and mobile banking services. 

Caitlin Long, a Wyoming native and cryptocurrency entrepreneur, worked alongside the Legislature to pass blockchain-enabling laws in 2018 and 2019. “At this point, [Wyoming] is the undisputed leader in blockchain,” Long said. “What this whole initiative has always meant for Wyoming is jobs, bringing outside capital into the state and revenue into the state. The Kraken announcement checks all three boxes in a very big way.”

This will not be a traditional, brick-and-mortar bank branch on the corner of your local downtown, Long said. “For the vast majority of folks, they get the benefit of the revenues coming into the state, and all of the ancillary demand for doctors and restaurants and all of those things, even if someone never touches or does business with the companies coming in,” Long said.