First U.S. Digital Asset Bank Just Got the Stamp of Approval From the Fed

The U.S.-based crypto exchange Kraken became the first digital asset bank to gain access to a Fed Master Account, while spot Bitcoin ETFs signaled a positive start to the month. 

TL;DR

• Kraken becomes the first digital asset bank in the U.S. to gain access to a Fed Master Account. 

• Spot Bitcoin ETFs show a strong start to March with three consecutive net inflow days. 

Kraken Becomes the First Crypto Exchange to Gain Access to a Fed Master Account 👀

For the past 18 months, we’ve seen many regulatory changes and the build-out of a foundation for digital assets in the financial industry, including the launch of plenty of crypto ETFs and crypto products launched by established Wall Street institutions.  

This week, we have more exciting news that could be the kick-off to something big! 

Kraken, one of the oldest and most established crypto exchanges, has announced that it has received a Fed Master Account. 

With this, the exchange’s Wyoming-chartered bank, Kraken Financial, becomes the first U.S. digital asset bank to gain direct access to the Federal Reserve’s payment infrastructure. 

This is big on many fronts! 

First off, it enables Kraken to use Fedwire, which is the Fed’s real-time settlement system that allows financial institutions to transfer funds and securities denominated in US dollars instantly.

That means there’s no need for Kraken to have an intermediary bank in the middle anymore. These intermediary banks were once challenging for crypto companies, often blocking them or offboarding them as clients.

But more importantly, it cements Kraken and, in a sense, the entire crypto industry as a player in the U.S. banking system.

Arjun Sethi, Co-CEO of Payward and Kraken, said in the press release: “This milestone marks the convergence of crypto infrastructure and sovereign financial rails. With a Federal Reserve master account, we can operate not as a peripheral participant in the U.S. banking system, but as a directly connected financial institution.”

I wouldn’t be surprised if we hear similar news from other larger crypto exchanges in the U.S. in the next few months, and maybe even see an emerging trend toward more digital asset banks. 

Super bullish for the digital asset ecosystem if you ask me! 

Spot Bitcoin ETFs Have Had a Great Start to March 🚀

It’s been a few weeks since I last wrote about the spot Bitcoin ETFs, but this week we have some impressive numbers to share. 

March has been off to a great start for all Bitcoin ETFs. We started the day with three consecutive days of net inflows. 

As you can see from the table above from SoSoValue, March 4 was so far the day with the biggest net inflow of $461.77 million, closely followed by March 2 with $458.19 million. 

But that’s not just me saying this. Erich Balchunas, the Senior ETF Analyst from Bloomberg, took to X to say:  

He states that this performance is incredibly impressive, considering that BTC is down 22% year-to-date (at the time of publishing the X-post) and around 50% since the all-time high. 

A rising price of Bitcoin usually results in more Bitcoin ETF inflows, so the ETF market’s good start to March isn’t a huge surprise if you follow the price of Bitcoin daily.

However, it’s still a positive signal for anyone HODLing Bitcoin that investors still seem to believe in Bitcoin, especially at what looks to me like a heavily discounted price. But hey, that’s just me, and not financial advice. 😁

Let’s see what the coming weeks will bring and if we will see March ending in the green.

Elsewhere in Bitcoin 📖

A quick look at what else has been happening in Bitcoin: 

• Real World Assets (RWAs) are gaining momentum

• The BTC reserves on exchanges fell to 2.7 million BTC

• Bitcoin is up $10,000 since the Iran military conflict started

• Bitwise is donating $230,000 to Bitcoin open-source developers

• The White House officially nominated Kevin Warsh for the Fed Chair role

Your fellow stacker in sats, 

Patrick Lowry

PS: Connect with me up on X if you want to hear more of my thoughts on Bitcoin and digital assets.

Disclaimer: The opinions expressed in this newsletter are solely those of the author and do not necessarily represent the views of any associated company. This newsletter is for educational and informational purposes only and should not be construed as investment, financial, or any other professional advice. Nothing here is a solicitation, offer, or recommendation to buy or sell any asset or to use any service. Investing in cryptocurrencies is highly speculative and carries a significant risk of substantial financial loss, so you must conduct your own thorough research and consult with independent professional advisors before making any decisions.