Last Wednesday, Kraken made cryptocurrency history with an announcement on their blog.
The State of Wyoming, where Kraken is headquartered, approved their application to form the world’s first Special Purpose Depository Institution (SPDI), tentatively called Kraken Financial.
On their blog, Kraken stated that their vision is to become the world’s trusted bridge between the crypto economy of the future and today’s existing financial ecosystem.
An SPDI bank charter allows Kraken to build that bridge in-house. Operating as an independent bank reduces their reliance on external financial institutions, as well as launching new services for their users.
From paying bills and receiving salaries in cryptocurrency to incorporating digital assets into investment and trading portfolios, Kraken Financial will enable Kraken clients in the U.S. to bank seamlessly between digital assets and fiat currency.
Wait, but what is a Special Purpose Depository Institution?
A traditional bank safeguards its customers deposits, and lends those deposits outwards as credit.
On the other hand, a custody bank offers services that are more focused on secure deposits, and providing a safe, trusted gateway for customers to conduct transactions in regulated securities and commodities markets.
The SPDI is a custody bank but for digital assets. Both custody banks and community banks, however, are still ‘banks’ by law as they hold customer deposits.
