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wave

Analysis: Kraken's approval for a Federal Reserve master account is a historic breakthrough for the cryptocurrency industry and may trigger a wave of applications from crypto institutions

Crypto journalist Eleanor Terrett posted on social media that Kraken, the second-largest crypto exchange in the U.S., has just accomplished something no other crypto company has done before—obtaining key access qualifications from the Federal Reserve.Kraken's banking division, Kraken Financial, has received approval from the Kansas City Fed to open a master account with the Federal Reserve. This marks the first time a native crypto company has gained (albeit with limited permissions) direct access to the Federal Reserve's payment system.This approval comes five and a half years after Kraken submitted its application to the Kansas City Fed in October 2020. The account allows Kraken to directly access the Federal Reserve's payment system, but does not include the right to use the Fed's lending tools. The company can hold reserves and settle with central bank funds, but cannot issue loans, use the discount window, or operate as a traditional commercial bank.According to sources, Kraken's approval is seen as a pilot project to test this new model. This decision is historically significant for the crypto industry, which has long been excluded from the traditional banking system, and indicates a shift in the Federal Reserve's stance. This move could trigger a wave of applications from other crypto companies seeking master accounts with the Federal Reserve. Custodia Bank, Anchorage, and Ripple's U.S. banking partner have all applied for master accounts.

Bitwise: Support for the CLARITY Act Wavers, Crypto Industry Faces a Critical Crossroads

The cryptocurrency asset management company Bitwise stated in its latest blog that as the U.S. CLARITY Act is stalled in Congress, the crypto industry is facing a critical turning point, with short-term trends potentially shifting from a speculative bull market to a more challenging "results-driven" phase.Bitwise Chief Investment Officer Matt Hougan pointed out that the CLARITY Act is crucial for "cementing" the currently relatively friendly crypto regulatory environment into a long-term legal framework. Without clear federal legislation, the crypto industry will remain exposed to the risks of future government policy swings. Recently, market expectations for the passage of the bill have significantly cooled, with related probabilities on Polymarket dropping from about 80% at the beginning of the year to around 50%. Coinbase CEO Brian Armstrong has also publicly stated that he has withdrawn support for the bill due to concerns that the current draft may harm consumer interests and stifle competition.Hougan believes that if legislation continues to stagnate, the crypto industry may need to emulate disruptive companies like Uber and Airbnb, which grew in regulatory gray areas, to make stablecoins and tokenized assets an "indispensable" infrastructure in the U.S. economy within the next three years. If successful, regulation will eventually be forced to follow; if scaling fails, future political changes could severely impact the industry.In terms of market impact, Bitwise sees two potential paths: if the CLARITY Act passes in a viable form, the market may quickly price in expectations for the definitive expansion of blockchain finance, driving prices significantly higher; conversely, if the legislation fails, the market may enter a wait-and-see period, with valuations suppressed by regulatory uncertainty, and returns becoming more reliant on real-world applications.Wall Street firm Benchmark also noted that legislative setbacks will delay rather than end the maturation process of the crypto industry, with the U.S. market potentially remaining below its potential level for some time. Capital is likely to favor Bitcoin-related exposure, robust balance sheets, and cash-flow-generating infrastructure, while remaining cautious in regulatory-sensitive areas such as exchanges, DeFi, and altcoins.
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