The Wyoming Banking Board has gone a step further by voting Kraken for a special purpose depository institution (SPDI) charter. This way, the San Francisco based exchange can operate as a bank.
With this new arrangement, Kraken happens to be the first SPDI bank in Wyoming and the first “newly chartered (de novo) bank in the state since 2006.”
A Managing Director at Kraken , David Kinitsky, explained that:
“By becoming a bank, we get direct access to federal payments infrastructure, and we can more seamlessly integrate banking and funding options for customers,”
Chris Land, a Wyoming attorney, also highlighted that the Division of Banking of the U.S. Office of the Comptroller of the Currency revealed that it had been working hand in hand with the Promontory Financial Group, a D.C.-based firm comprising of lawyers and ex-government regulators to publish the first manual for banks on issues relating to digital assets. What is more, with this arrangement, Kraken gets to operate in other states without having to go through the hassles of newly-processed compliance from state to state.
Kraken started to give hints as to its new status when the now chartered bank stated that their services will range from “ things like qualified custody for institutions, digital-asset debit cards and savings accounts all the way to new types of asset classes. We can engage with securities and commodities and things like that as a bank. So a lot more TBD there.”
Since special purpose depository institutions are precluded from lending, Kraken’s income plan revolves around fees and other services as such.
It is important to understand that although SPDI banks can store-keep virtual assets, they do not have the legal title over them. This means that perhaps if these banks go down in the drain, customers can always retrieve their digital assets. The reverse is the case for banks who stand as trustees for their customers.
As at press time, The Division of Banking is presently considering six companies that are applicants or potential applicants for the SPDI charter.
It has been said that:
“SPDI banks have to provide a Merkle tree to their auditor so they can cryptographically verify that their reserves are there,” she said. “We have zero insight into whether the service providers are solvent or not and they’re not even audited in most cases.”