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*BREAKING*@Krakenfx just won approval to create America’s first crypto bank.
World, please meet Kraken Financial. Kraken Financial, world.
Wait, a what? Kraken is a BANK?! How did this even happen?!
Allow me to threadeth.
2. It all begins on this island call Yap
Heh, actually it begins in Delaware! You might remember from back in 2016 the Delaware Blockchain Initiative, an effort to build a bridge between a US state and the crypto industry.
Heh, actually it begins in Delaware! You might remember from back in 2016 the Delaware Blockchain Initiative, an effort to build a bridge between a US state and the crypto industry.
3. We announced it at Consensus’ keynote that year https://www.coindesk.com/delaware-government-blockchain-shares. Then-governor Jack Markell made a joke about being Satoshi. He laughed. The audience laughed. Somebody did an ICO in the background. It was a simpler time.
4. Anyway, the DBI had several goals. We achieved some of them. For example, the amendment of Delaware law to permit a corporation to rely exclusively on the contents of a blockchain for its stock ledger. It was pretty cool! https://www.coindesk.com/delaware-governor-signs-blockchain-legislation-law
5. But I wasn’t the only one who worked on the DBI. @AndreaTinianow and @CaitlinLong_ helped lead the charge - and there was still so much we weren’t able to get done, even working together...
6. For example, we really wanted new commercial laws for crypto ownership and custom regulatory licenses for crypto infrastructure companies. @CaitlinLong_, for one, suspected her home state of Wyoming could be a good fit for these efforts. Turns out she was right.
7. Thanks largely to Caitlin, the Wyoming Blockchain Task Force was formed and the legislature began considering the initiatives we couldn’t get done in Delaware. They didn’t stop there, though. Wyoming has far outstripped Delaware’s efforts to date.
8. As things started picking up speed in Wyoming, @krakenfx joined the process, acting as both advocate and educator on crypto and blockchain technologies. @jespow was personally involved.
9. One of the initiatives was the creation of a new kind of bank charter!
What can the bank do? It can take deposits, operate payment systems, and, of course, custody crypto for individuals and businesses and even some regulated entities
What can the bank do? It can take deposits, operate payment systems, and, of course, custody crypto for individuals and businesses and even some regulated entities
10. What can’t it do? Well for one, it can’t lend on fractional reserves. This is critical. Fractional reserves create risks that, in the US, trigger the Bank Holding Company Act and FDIC supervision under the FDI Act.
11. Since it can't engage in that risky activity, those laws don’t apply. It’s primarily regulated by the State of Wyoming Division of Banking. But…
12. It is also eligible to apply for an account at the Federal Reserve and can even seek membership. This brings with it solemn responsibilities, plus Fed supervision. It is a powerful tool, and I hope this becomes de rigueur for all applicants.
13. A crypto-focused bank would permit an efficient, transparent and responsible nexus between the traditional financial system and the crypto ecosystem.
At least that’s how @krakenfx saw it.
At least that’s how @krakenfx saw it.
14. 
BTW for those who did not spend their youths exactly as I did, jacked into to a LAN, surrounded by beige boxes in someone’s poorly-insulated suburban garage until sunrise, that’s what a nexus looks like.
BTW for those who did not spend their youths exactly as I did, jacked into to a LAN, surrounded by beige boxes in someone’s poorly-insulated suburban garage until sunrise, that’s what a nexus looks like.
15. So, after many months of thinking, lawing, compliancing and writing, drafting and redrafting, Kraken filed the first application to become a Wyoming Special Purpose Depository Institution, or, as I self-cringingly refer to it: A crypto bank.
16. Did I say months? I meant inches. Here it is – in all its glory – I present to you an exclusive copy of @krakenfx’s actual bank charter application!
17. Then, just last month, to little fanfare, the Kraken team flew from around the world to Wyoming to make its case live in a public hearing before the Wyoming Banking Board.
18. For the lawyers out there: It was a contested case format pursuant to the Wyoming Rules of Administrative Procedure. We gave an opening argument, closing argument, questioned witnesses, etc.
19. Even made objections like I used to do in courtrooms as a real live litigator. Admittedly I was a little rusty. My performance was more My Cousin Vinny than To Kill a Mockingbird but the Kraken witnesses were the real stars – and they shone brightly.
20. Another Vinny gif because he deserves it. He inspired this middle-class Italian-american kid with a weird accent (now trained away…mostly), born to a *very* immigrant family, and raised by a bank teller(!), to leave home and take a shot at lawyering.
21. Anyway, early this morning, the Wyoming Banking Board unanimously approved @krakenfx’s application. We are over the moon.
22. Here at Kraken we stan Wyoming.
It’s true! Wyoming has proven itself forward-thinking and thoughtful about how to mitigate real risks in effective ways. There is, refreshingly, no “regulating for regulation's sake” in the SPDI framework.
It’s true! Wyoming has proven itself forward-thinking and thoughtful about how to mitigate real risks in effective ways. There is, refreshingly, no “regulating for regulation's sake” in the SPDI framework.
23. Some of our team has already moved to Wyoming and, yes, we’re opening an office in Cheyenne.
24. With @Kinitsky at the helm, Kraken hopes to offer:
-Digital asset custody
-Checking and savings accounts
-Wire transfers
-Trust accounts
-Online and mobile banking UIs
-Debit cards
-Account management services
-Little chained-up pens; and
-Deposit verifications
-Digital asset custody
-Checking and savings accounts
-Wire transfers
-Trust accounts
-Online and mobile banking UIs
-Debit cards
-Account management services
-Little chained-up pens; and
-Deposit verifications
25. So congratulations to the Kraken team – particularly to the compliance team which unceasingly impressed me with their extensive knowledge, sound judgment and ability to be both nocturnal and whatever the opposite of that is, but at the same time somehow.
26. “diurnal”. Huh.
27. Of course, congratulations to the Kraken legal team, a lean, mean, banking-lawyer-machine to which I am quite partial and wholly reliant. Heartfelt thanks to our outside banking counsel at @DLxLawLLP and our local counsel @MDKaufman307.
28. So what’s next for the Kraken team? Nothing. We’re completely done here and no more work ahead of us at all until the bank just autonomously commences business with all these polished products in a few months. Vacation time. Cash me outside on a beach somewhere.
29. Now stop reading twitter and oggle our bloggle for more information, without prejudice, subject to change, and not for reliance: https://blog.kraken.com/post/6241/kraken-wyoming-first-digital-asset-bank/
