Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
The approval of Kraken’s access to the Federal Reserve’s core payments infrastructure has sparked a backlash from the banking sector.
In a statement on Wednesday, the Association of Independent Banks of America (ICBA) and the Banking Policy Institute (BPI) strongly opposed the decision of the Fed, which pose a risk to the stability of the financial system.
Banks challenge federal approval for Kraken
Hours after news broke that the Kraken had become… The first cryptocurrency company to get a master account From the Federal Reserve, ICBA issued a scathing statement in response.
Giving non-bank entities and crypto-related institutions access to master accounts – which have traditionally been limited to strictly regulated insured depository institutions – presents risks for the banking system, ICBA CEO Rebecca Romero said, adding that the Fed should continue to limit master account access only to institutions that meet the highest standards of the financial services industry.
In its statement, the Banking Policy Institute (BPI) expressed concern about the decision-making process.
The Banking Policy Institute (BPI) said that this action ignores the public feedback requested by the Fed on this regulatory framework, and was taken without any transparency on the approval procedures or risk mitigation measures imposed to address the significant risks it raises.
The indirect statements noted that Kraken now has direct access to the same payment networks used by thousands of American banks and credit unions, which allow them to settle transactions in US dollars directly through the Federal Reserve, eliminating intermediary banks.
Kraken doesn’t get all the benefits that traditional banks get with the Fed, like earning interest on reserves. However, this represents a recommendation A major win for the digital currency industry.
This tension between banks and cryptocurrencies reflects an extension beyond the approval of Kraken, and highlights lingering concerns about the growing role of cryptocurrencies in the traditional financial sector.
The ongoing battle on the benefits of stablecoins
Before the GENIUS Act was passed last July, banks lobbied hard against a lax regulation of stablecoins, with their main arguments focused on the risk that… It is based on traditional bank deposits.
This concern was based on logical reasons, as a report issued by the Treasury Department last April estimated that stablecoins could lead to a deposit influx of up to $6.6 trillion.
A month after the act GENIUS Act, five banking associations – including ICBA and BPI – sent message The Congress urges them to close a loophole that allows stablecoin issuers to pay interest via trading platforms.
They warn that such a gap could also lead to higher borrowing costs and a lower amount of credit available to businesses and households.
The letter explained that without an explicit prohibition that applies to trading platforms, which are a distribution channel for stablecoin issuers or their affiliates, the requirements of the GENIUS Act could be easily circumvented and undermined to allow indirect payment of interest to stablecoin holders.
These tensions are now reflected in… Discussions on the CLARITY Act. The main concern has been identified around whether cryptocurrency platforms can offer interest returns on stablecoins.
Unfortunately for the banking sector, the President of the United States, Donald Trump, has recently had trouble with the cryptocurrency industry.
Trump criticizes banks for delaying CLARITY Act
Tuesday evening, The president blamed the American banks By undermining the GENIUS law and hindering the CLARITY law.
Trump wrote on Social Truth that Americans should earn more money from their savings. He added that the banks are making record profits, and they are not allowed to undermine our aggressive cryptocurrency agenda that will eventually descend on China and other countries if the Clarity Act is not passed.
The phrase signaled the most severe presidential intervention in the legislative battle over stablecoin awards.
urged Trump, whose family is the property Interest in several cryptocurrency projectsCongress passed the market structuring bill Before the November mid-term elections. This election could end the current Republican control of the House and Senate.
Trump’s social media post came hours after a Politico report confirmed that he held a private meeting with Coinbase CEO Brian Armstrong at the White House.
