Despite ongoing regulatory scrutiny, cryptocurrency exchange Kraken is moving forward with plans for its own bank.
"Kraken Bank is very much on track to launch, very soon,” the company’s chief legal officer, Marco Santori, said Monday on the podcast The Scoop.
"We're going to have those pens with the little ball chains. We're going to order thousands of them and attach them to the desks of Wall Street banks everywhere. With our logo," he told podcast host and The Block journalist Frank Chaparro.
Kraken Support backed up Santori’s statements, assuring that Kraken Bank was “not open yet but on its way.”
It’ll be available to existing U.S. clients with “potential international expansion in the future,” Kraken Support tweeted.
The news comes as regulatory scrutiny tightens for the crypto industry as a whole. Kraken last month agreed to shut down its crypto staking-as-a-service program and pay the Securities and Exchange Commission $30 million to settle allegations of securities violations.
Kraken announced it would launch a bank in September 2020, when regulators in Wyoming approved such a move. Kraken Bank, at the time, became the first special-purpose depository institution, focused on digital assets. Like traditional banks, SPDIs receive deposits and conduct activities incidental to the business of banking such as custody, asset servicing, fiduciary asset management, and related activities, according to the Wyoming Division of Banking.
SPDIs can’t make loans with customer deposits and they must maintain liquid assets valued at 100% or more of their depository liabilities. Therefore, SPDIs don’t have to be insured by the Federal Deposit Insurance Corp., though they can choose to pursue it.
“From paying bills and receiving salaries in cryptocurrency like Bitcoin to incorporating digital assets into investment and trading portfolios, Kraken Bank will enable Kraken clients in the U.S. to bank seamlessly between digital assets and national currencies,” Kraken wrote on its blog in 2020.
The plan back then was to launch Kraken Bank in phases beginning in the first quarter of 2021, with further steps in 2022.
Kraken did not respond to a Banking Dive inquiry on the hold-up, and Santori didn’t address it on Monday’s podcast.
But it’s no secret that the crypto sector has been in a state of near-constant turmoil in one way or another since spring 2022.
Kraken was among crypto firms to make staff cuts in 2022; and several of Kraken’s competitors, including Voyager Digital, Celsius and FTX have gone bankrupt. The financial uncertainty has called attention to the crypto sector from regulators and lawmakers.
Kraken did not return a request for further comment.